AITKEN WHYTE LAWYERS BRISBANE
LITIGATION & DISPUTE RESOLUTION LAWYERS & SOLICITORS FOR BRISBANE, THE GOLD COAST & THE SUNSHINE COAST, QUEENSLAND
Earlier this year, our firm represented a respondent in proceedings in the Supreme Court of Queensland at Brisbane.
Prior to our engagement, the applicants had applied to Court on an ex-parte basis – without notice to our client – to obtain a freezing order. His Honour Justice Bradley granted the freezing order.
A freezing order is sometimes referred to as a Mareva Order or Mareva Injunction, after the landmark decision in Mareva Compania Naviera SA v International Bulkcarriers SA [1980] 1 All ER 213.
The effect of the freezing order is to prevent the respondent from dealing with their own assets. The Supreme Court of Queensland Practice Direction number 1 of 2007 includes a pro forma freezing order. The practice direction may be accessed here.
To obtain the freezing order, the Applicants were required to show:
(a) A good arguable case against the Respondent;
(b) A requisite danger that a judgment would be unsatisfied because the Respondent’s assets would be dissipated; and
(c) It was in the interests of justice that a freezing order be made.
The requirements are set out in the Queensland Court of Appeal decision in Palmer v Parbery & Ors, QNI Metals Pty Ltd & Ors v Parbery & Anor [2019] QCA 27. That decision is accessible here. It involved Clive Palmer, Mineralology Pty Ltd and Queensland Nickel Pty Ltd.
As indicated above, the freezing order was made without notice to our client.
Where a party approaches a Court for orders without notice to the opposing party – that is, on an ex-parte’ basis – that party and their lawyers must act with utmost good faith. They must inform the Court of facts or matters even if those things are detrimental to their own case.
If the applicant seeking orders does not comply with their duties; any orders improperly obtained on an ex-parte basis, would normally be discharged or set aside at the request of the respondent.
In Mineralogy Pty Ltd v The State of Western Australia [2020] QSC 344, Justice Martin at [80] stated:
…their Honours referred to what was said by Isaacs J in Thomas A Edison Ltd v Bullock where, having referred to an earlier English decision, his Honour went on to say:
“… it is the duty of a party asking for an injunction ex parte to bring under the notice of the Court all facts material to the determination of his right to that injunction, and it is no excuse for him to say that he was not aware of the importance. Uberrima fides is required, and the party inducing the Court to act in the absence of the other party, fails in his obligation unless he supplies the place of the absent party to the extent of bringing forward all of the material facts which that party would presumably have brought forward in his defence to that application. Unless that is done, the implied condition upon which the Court acts informing its judgment is unfulfilled and the order so obtained must almost invariably fall.”
We submitted to the Court that it was not in the interests of justice to make the freezing order because the Applicant’s ex-parte obligations were not met.
We, with Simon Trewavas of Counsel, submitted to the Court on behalf of our client that the applicants failed in their obligations:
(a) by overstating the true factual position of our client, in that the applicants submitted to the Court that our client owned unencumbered property when he did not own the property at all. Someone with a similar name was registered as owning the property referred to by the applicants. It seems to have been a case of mistaken identity;
(b) by failing to inform the Court of the lack of evidence in their Barnes v Addy claims against our client; and
(c) by failing to allow a carve-out from the freezing order for our client for his reasonable living expenses.
As mentioned above, the claims made against our client by the applicants were ‘Barnes v Addy’ claims. Claims may be made for ‘knowing assistance’ or ‘knowing receipt’ which are also referred to as claims under the first or second limb of Barnes v Addy.
Claims under the first or second limb of Barnes v Addy involve a separate party committing a breach of trust or fiduciary duty, and the respondent being ‘knowingly’ involved or ‘knowingly’ receiving trust property.
The freezing order (or Mareva Order) against our client was discharged by Her Honour Justice Hindman (the Supreme Court of Queensland).
Our client was also successful in obtaining a costs order against the applicants.
The general rule is that costs follow the event. Rule 681 of the Uniform Civil Procedure Rules 1999 (Qld) sets out this general principle. If you are successful in obtaining orders from the Court against the opposing party, then the Court usually makes a costs order in your favour.
There are different types of costs orders. Costs could be fixed under rule 687(2) of the UCPR but more commonly, the Court awards ‘standard’ costs. Courts may also make ‘indemnity’ costs orders which as the name suggests are designed to indemnify the successful party for their costs. Indemnity costs orders are usually only made when there are special reasons to do so, for example, if the unsuccessful party’s conduct was particularly unreasonable or if they unreasonably failed to accept a settlement offer. A ‘standard’ costs order requires an assessment, which usually takes further time.
The Court has a discretion as to whether to award costs and on what basis any costs order should be made.
We have experience in applying and responding to these types of applications. If you have received a freezing order or wish to apply for a freezing order, you should act quickly to preserve your rights
Speak to us if you are considering making a Claim but are worried the other side may try to hide or sell their assets or if you have been served with court proceedings relating to the freezing of assets.
We will consider not just the merits but also the commerciality of the application.
A Mareva injunction, or freezing order, can be a very effective tool in litigation. We have experience in these types of applications for both applicants and respondents.
When dealing with urgent and complex Court applications, proper experience is essential.
Aitken Whyte Lawyers are focused on results. Our civil litigation lawyers will advise you on the proper course to take if:
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Brisbane
Aitken Whyte Lawyers Brisbane
2/414 Upper Roma Street
Brisbane QLD 4000
