Asset Preservation Orders (Freezing Orders)

October 21, 2019/,

An Asset Preservation Order (also known as Freezing Orders) is an interlocutory order (a temporary or provisional order, given during the course of the legal proceedings) made by the Court to preserve the assets of a person.

The orders are intended to prevent that person from doing things like hiding those assets, spending them, distributing them, or transferring them overseas. These orders are also known as Mareva Orders, named after the original English Court of Appeal case of Mareva Compania Naviera SA v International Bulk Carriers SA (The Mareva) [1980] 1 All ER 213.

Purpose

The purpose of an Asset Preservation Order is to minimise the risk that a judgment in favour of the person seeking the Asset Preservation Order (the Applicant) will be frustrated because of actions taken by the person the subject of the application (the Respondent).
The remedy sought in an Asset Preservation Order is considered drastic and the Court considers these matters seriously. The Court has to strike a fair balance between the protection of the Applicant’s interest and the rights of the Respondent.

An Applicant for an Asset Preservation Order should show the following:

  1. That it has a good arguable case; and
  2. That there is a danger (not a risk) that any judgment granted in its favour will be wholly or partly unsatisfied because the Respondent might abscond, remove the assets from wherever they are, dispose of the assets, sell the assets, or diminish the value of the assets;
  3. There are additional matters that must be included in a supporting affidavit including:
    a. The proper form of the orders and the value of the assets sought to be preserved or frozen;
  4. Any exclusions to the orders such as exclusions that the assets may be used for living, legal, and business expenses;
  5. An undertaking by the Applicant as to damages (or why no undertaking is being offered); and
  6. A full disclosure of all the material facts.

An Asset Preservation Order, if granted, usually continues until the time that the proceedings are finalised.

Conclusion

Asset Preservation Orders can be disputed, and are often done so on the following basis:

  1. The Applicant has no good arguable case;
  2. The Respondent has the capacity of paying any judgment made in favour of the Applicant, and that there is no danger of the Respondent leaving the country, removing their assets, or disposing, selling, or otherwise diminishing their assets; and/or
  3. The Applicant has failed to make material disclosure of all of the facts.

Asset Preservations Orders – whether applying for them or responding to them – are complicated and complex. We at Adams & Partners Lawyers have a good deal of experience with them. If you have a matter that requires us to either consider applying for one or respond to one, please do not hesitate to give us a call.

Written by Kenneth Ti

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