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You spend months building a claim. You issue proceedings. Evidence is gathered. Costs are incurred.
Then, just as the dispute reaches a critical stage, the other side starts selling property, transferring funds or moving assets beyond reach.
Winning the case means very little if there is nothing left to recover.
That is why courts have the power to make freezing orders.
What is a freezing order?
A freezing order, sometimes called a Mareva order after a landmark English case decided by Lord Denning in 1975, is a court order that prevents a person or business from dealing with assets where there is a risk those assets may be moved, hidden or dissipated before a judgment can be enforced.
In practical terms, it preserves assets until the dispute is resolved.
A freezing order does not determine who wins the case. It does not hand assets to the party seeking the order. It simply preserves the position so that a successful judgment is worth more than a piece of paper. The order can apply to bank accounts, real estate, shares, business assets and other property. In some circumstances, it can extend to assets held through companies, trusts or third parties.
Why would someone seek a freezing order?
Courts make freezing orders to address a specific risk. The concern is not that a person owes money. The concern is that assets may disappear before a judgment can be enforced.
Examples include:
- A business owner discovers funds are being transferred to related entities.
- A debtor begins selling significant assets shortly after receiving legal demands.
- A company restructures its affairs in a way that leaves little value available to creditors.
- Property is being sold and sale proceeds are being moved interstate or overseas.
- Assets appear to be shifting through trusts, companies or family members.
In each case, the concern is the same. If nothing is done now, there may be nothing left at the end of the case.
Does a freezing order shut down a business?
Usually not. Many people assume a freezing order means bank accounts are frozen and business operations stop immediately. That is rarely the objective.
Courts generally seek to preserve assets while allowing legitimate activity to continue.
For that reason, freezing orders often allow:
- Ordinary business expenses.
- Employee wages.
- Reasonable living expenses.
- Reasonable legal costs.
The purpose is to stop unusual transactions that place assets beyond reach, not to destroy a functioning business.
What does the court need to see?
A freezing order is one of the most powerful interim remedies available. Courts do not grant them lightly.
In broad terms, two questions arise:
| Is there a reasonably strong claim? | Is there a real risk the assets will disapper? |
| The person seeking the order must show more than suspicion or accusation. They must present evidence demonstrating a genuine and reasonably arguable claim. The Court is not deciding the entire case at this stage. It simply needs to be satisfied that the claim has substance. | This is the critical issue. The court must be satisfied there is a real possibility that assets will be moved, sold, dissipated or otherwise put beyond the reach of a future judgment. The risk must be supported by evidence. Sometimes that evidence comes from recent asset transfers. Sometimes it comes from the surrounding circumstances. In serious cases involving alleged dishonesty, the court may conclude there is a greater risk that assets will be dealt with in a way that defeats enforcement. The focus is always practical: if the claim succeeds, will there still be assets available to satisfy the judgment? |
What happens if a freezing order is made against you?
A freezing order is a serious event requiring immediate attention. The first step is understanding exactly what the order requires.
Depending on its terms, the order may require you to:
- Stop dealing with certain assets.
- Provide information about assets you own or control.
- Disclose bank accounts, property or corporate interests.
- Attend a court hearing.
A freezing order does not mean you have lost the underlying dispute.
It does mean the court considers there is sufficient concern about the preservation of assets to justify immediate intervention.
Ignoring the order can have serious consequences. The practical priority is understanding your obligations, gathering relevant evidence and responding quickly.
When should you consider seeking a freezing order?
The most effective freezing order applications are often made before assets have disappeared.
Warning signs may include:
- Unexplained transfers of funds.
- Sudden sales of valuable assets.
- Movement of assets to related entities.
- Corporate restructures with no obvious commercial purpose.
- Assets being transferred to trusts or family members.
- A party becoming difficult to locate or communicate with.
- Information suggesting assets are being moved overseas.
Once assets have vanished, recovery becomes significantly more difficult, more expensive and, in some cases, impossible.
The practical takeaway
A judgment is only as valuable as the assets available to satisfy it. Freezing orders exist to stop assets disappearing before a court can determine a dispute. For claimants, they can preserve the value of a hard-fought legal victory. For recipients, they create immediate obligations that demand careful and prompt attention.
When assets are moving, time matters. The sooner the issue is identified, the more options remain available. However, a freezing order is a significant step. Applications are often brought urgently, require detailed evidence and can have substantial commercial consequences for everyone involved. While they can be a powerful tool to protect a claim, they should be approached strategically and with a clear understanding of the outcome sought. Early advice can be critical in assessing whether a freezing order is justified, how quickly action should be taken, and whether there are alternative avenues to protect a party’s position.
If any of the issues raised in this article resonate with circumstances you, your business or someone you know may be facing, or if you would like advice about seeking or responding to a freezing order, please get in touch with our Dispute Resolution & Litigation team who are experienced in this area, including with successfully obtaining freezing orders. We would be pleased to assist.
