The short answer
Comply with the order immediately, preserve every document, and instruct the same day a specialist disputes solicitor with civil fraud expertise. A freezing order binds you from the moment you know of it. Breach is contempt of court and may be punished, including by imprisonment. But compliance is not surrender. The order was almost certainly made without you being heard (ie on an ex parte basis, without notice to you), and the return date, usually only days away, is your first chance to challenge it, narrow it or have it discharged.
THE TWO RULES THAT PROTECT YOU Comply now, contest later. The order binds you from the moment you know of it, even if it was wrongly granted. Breach is contempt of court. For an individual, that can mean imprisonment. For a company, fines and sequestration. Compliance does not stop you applying to discharge or vary the order. Preserve everything. Do not delete, alter or move a single document, device or account. A fraud plaintiff will look for destruction. If it is found, the court can draw adverse inferences from it, and it can ground a search order or contempt application – not to mention the potential criminal consequences. |
What you have actually been served with
A freezing order restrains you from dealing with or diminishing the value of your assets, up to a stated amount, so that any judgment against you is not rendered worthless. In New South Wales the orders are made under Part 25 of the Uniform Civil Procedure Rules 2005 (NSW) and Practice Note SC Gen 14; in the Federal Court, under Division 7.4 of the Federal Court Rules 2011 (Cth) and Practice Note GPN-FRZG. The order is not a judgment. It says nothing final about liability. The courts describe it as an exceptional remedy, granted with a high degree of caution: Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at [51]. Its reach can extend to assets outside Australia: Deputy Commissioner of Taxation v Huang [2021] HCA 43.
The fraud claim served with it is a different thing again. It is the substantive case you will answer through pleadings, evidence and, if necessary, trial. Do not let the urgency of the freezing order overshadow or distract you from the defence of the claim.
The action list: your first seven steps
- Instruct a specialist disputes solicitor today. Not a generalist; someone with civil fraud expertise. The return date is days away, the asset disclosure deadline is shorter, and the early decisions are hard to unwind. Your solicitor’s first tasks are to diarise every deadline in the order, open a line to the applicant’s solicitors, get all documents used in support of the freezing order and the transcript of the hearing, take instructions from you and start developing your strategy.
- Read the order line by line and comply. Note the frozen amount, the assets covered, the exceptions for legal costs, living expenses and ordinary business dealings, and the undertakings the applicant gave the court, including the undertaking as to damages. Circulate a compliance note to anyone in the business who moves money.
- Preserve all documents and devices. Suspend any automatic deletion. Touch nothing. Destruction converts a defensible case into an indefensible one.
- Say nothing beyond your legal team. Do not contact the applicant, co-respondents or potential witnesses about the merits. Do not explain yourself by email. Everything you write now is discoverable. Route all communications through your solicitor.
- Prepare the asset disclosure affidavit with care. The order will usually require you to disclose your assets on affidavit within a short period. It must be accurate and complete. Take advice first: objections, including the privilege against self-incrimination or exposure to penalties, must be raised properly, not by silence.
- Stabilise banking, insurance and the business. Your banks will be served and accounts may be blocked beyond the order’s terms. Your solicitor can correct overreach with the banks. Notify insurers where a policy may respond, and plan payroll, suppliers and tax around the ordinary-course exception.
- Decide the return date strategy. The realistic options: discharge the order, narrow it, extend the carve-outs, offer undertakings or security in place of the order, or consent to a regime you can live with while the fraud claim is fought. An applicant who obtained the order without notice owed the court full and frank disclosure; a material failure can be grounds for discharge: Thomas A Edison Ltd v Bullock (1912) 15 CLR 679 at 681–682. The High Court restated the duty in Aristocrat Technologies Australia Pty Ltd v Allam (2016) 327 ALR 595; [2016] HCA 3 at [14]–[15]. The cross-undertaking in damages given by the applicant may need to be fortified with some form of security – such as a payment into court.
The grounds on which freezing orders are challenged
Four arguments to consider. First, the applicant does not have a good arguable case on the underlying claim. Secondly, there is no real danger that a judgment would go unsatisfied; a bare assertion of risk is not enough. Thirdly, the applicant failed in its duty of candour when it obtained the order without notice. Fourthly, the order is disproportionate: it freezes more than the claim, captures assets it should not, or strangles a legitimate business. Even where discharge is unrealistic, narrowing the order and securing workable carve-outs is often the difference between a business that survives the litigation and one that does not.
How Ironbridge Legal handles it
Ironbridge Legal acts for respondents to freezing orders, search orders and fraud claims, as well as for the parties who seek them. Because we run recovery cases, we know where applications overreach and where the evidence is thin. On the defence side we move on four fronts at once: immediate compliance and preservation, the return date challenge, the asset disclosure obligations, and the long-game defence of the fraud claim itself. Our fraud, asset tracing and recovery practice is market-leading in Sydney and Melbourne as well as Australia more generally.
If you have been served, the return date is already running. Trevor Withane leads our team and is the right first call. A confidential initial conversation can be arranged through trevor.withane@ironbridgelegal.com.au or +61 2 8005 3057
