We will all be involved in a dispute at some point in our lives. We may even reach a point where we want to take someone to court in order to reach an outcome that we desire.
Have you wondered what happens if the other party is not able to pay up if you win against them? If you reasonably believe that the other person is going to sell their property in an attempt to avoid paying if they lose, you should seek asset freezing orders (also known as an injunction preventing a party from disposing of or diminishing assets or formerly known as Mareva orders). Such order is a drastic remedy requiring evidence of a real risk of asset dissipation.
There are lots of misconceptions about when and how you can get an asset freezing order.
Myth 1: The purpose of Freezing Orders is to seek security for a pending judgment
Too often, applications for a freezing order are made with the sole intention of seeking security for a judgment which a plaintiff hopes to gain in the future. There are certain requirements you must meet before the court will make a freezing order.
Myth 2: Freezing Orders are easily lodged with few requirements
This is an extreme order which will not be granted lightly. There are a variety of requirements that must be satisfied before the court will allow the order.
- Firstly, there is a minimum standard to which the case must be: The case must be a ‘good arguable case’, that is, you must be able to convince the court that you have a serious issue to be tried by the Family Court.
- Next, the Applicant must prove that there is a real danger that the other person may dispose of or diminish the asset pool. You will be required to provide significant evidence to support this claim.
Finally, you must set out how you are likely to suffer if the order is not made and identify any other person who may be adversely affected.
Myth 3: You can freeze all assets held by the respondent
When applying for a freezing order, the Applicant cannot simply request a blanket freezing order over all of the known assets a defendant possesses.
The order must also exclude assets for dealings by the respondent for legitimate purposes. This may include payments for ordinary living, business expenses or dealings in the discharge of contractual obligations that were incurred before the freezing order was made.
Seeking legal advice
It is imperative that you are properly informed of the obligations and requirements of a freezing order before lodging an order with the court. If you require legal advice based on your unique circumstances, please do not hesitate to contact our experienced litigation lawyers at Etheringtons Solicitors in North Sydney on 9963 9800 or via our contact form.