#8500 - Pre Commencement Interim Orders - Litigation - Civil Procedure

Interim preservation orders: When something happens that means you need urgent relief from the court. Eg. procedures to preserve rights and property which may be utilized before/after an action is commenced:

• Orders for preservation of property: UCPR r 25.3

• Orders for disposal of perishable or similar property: UCPR r 25.4

• Orders for interim distribution of property/income surplus to subject matter of proceedings: UCPR r 25.5-25.6

• Orders for payment of shares in a fund before ascertainment of all persons interested: UCPR r 25.7

• Freezing (Mareva) orders: UCPR r 25.11

• Search (Anton Piller) orders: UCPR r 25.19

• Whole idea is that there is something that happens that means you need urgent relief from the court

  • You need to get it before you commence litigation – but you can see that in Cardile plaintiff applies for order once litigation concluded

Rationale: Prevent abuse of court’s process. Originally inherent or implied power, now in UCPR r 25.11. A limited exception to the general rule that a plaintiff must obtain his judgment and then enforce it

1. State Law: Freezing orders can be granted by court under UCPR r 25.11. ( UCPR does not affect the common law or inherent jurisdiction of the court to grant Mareva injunctions: r 25.15; Jackson v Sterling; Cardile.)

2. Requirements under r 25.11(1): The court may make an order (a "freezing order"), upon or without notice to a respondent, for the purpose of preventing the frustration or inhibition of the court’s process by seeking to meet a danger that a judgment or prospective judgment of the court will be wholly or partly unsatisfied: r 25.11(1)

   1. Eg. May be order restraining respondent from removing any assets located in or outside Australia or from disposing or dealing with or diminishing the value of those assets: r 25.11(2) UCPR

   2. In order to see whether the discretion should be exercised and requirements have been met we can look to the common law (eg Jackson v Sterling; Cardile )

3. What the order can be:

   1. Freezing order under r 25.11(2): A freezing order may be an order restraining a respondent from removing any assets located in or outside Australia or from disposing of, dealing with, or diminishing the value of, those assets. Can be against a third party or prospective judgment debtor: r 25.14

   2. Ancillary orders under r 25.12: Court can make an order ancillary to freezing order as the court considers appropriate. Including eg: r 25.12(2)(a), eliciting information relating to assets relevant to freezing order or prospective freezing order; r 25.12(2)(b) determining whether the freezing order should be made.

4. Who order can be against: Can be against a respondent who is not a part to proceeding in which substantive relief is sought against: r 25.13 UCPR

   1. “An application for a freezing order or an ancillary order may be served on a person who is outside Australia (whether or not the person is domiciled or resident in Australia) if any of the assets to which the order relates are within the jurisdiction of the court”: r25.16.

More specific ways in which the court’s power is regulated:

5. Orders against judgment debtor or prospective judgment debtor or third party: under r 25.14 – but nothing in these requirements affects the ability of the court to make an order if it is in the interests of justice to do so: r 25.14(6)

   1. R 25.14(4): The court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because any of the following might occur:

(a) the judgment debtor, prospective judgment debtor or another person absconds,

(b) the assets of the judgment debtor, prospective judgment debtor or another person are:

(i) removed from Australia or from a place inside or outside Australia, or

(ii) disposed of, dealt with or diminished in value

2. R 25.14(5) enshrines Cardile: The court may make a freezing/ancillary order or both against a person other than a judgment debtor or prospective judgment debtor (a "third party") if the court is satisfied, having regard to all the circumstances, that:

(a) there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because:

(i) the third party holds or is using, or has exercised or is exercising, a power of disposition over assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor, or

(ii) the third party is in possession of, or in a position of control or influence concerning, assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor, or

(b) a process in the court is or may ultimately be available to the applicant as a result of a judgment or prospective judgment, under which process the third party may be obliged to disgorge assets or contribute toward satisfying the judgment or prospective judgment.

6. Transnational freezing orders:

   1. Or when applicant has good arguable case on cause of action justiciable in another court (r 25.14(1)(b)) and when there is a sufficient prospect that the judgment will be registered or enforced by the other court (r 25.14(3)) court can make a freezing order if satisfied under r 25.14(5):

      1. R 25.14(5)(a): danger that prospective judgment will be wholly/partly unsatisfied because a third party exercising a power of disposition over assets.
         OR

      2. R 25.14(5)(b): a process that may ultimately be available to the applicant as a result of a judgment/prospective judgment, under which process the third party may be obliged to disgorge assets/contribute towards satisfying the judgment or prospective judgment.

7. Note applicant will usually have to give undertaking as to damages: Cardile; Practice Note SC Gen 14 at [16].

8. If order against third party, and if proceedings available against them, applicant will have to give undertaking to commence proceedings expeditiously as is possible:

   1. ‘Difficult to conceive of cases where such an undertaking would not be required’: Cardile

Rationale for injunction

9. Order is for the purpose of preventing the disposing of actual assets so that a judgment would be unsatisfied and thus the court process frustrated: Jackson v Sterling; UCPR r 25.11

   1. It is not to provide security for P, or improve their position, or require D to provide security as a condition of being allowed to defend action against him: Jackson v Sterling

   2. It is not meant to introduce a new vulnerability to imprisonment for debt by requiring D to find money which the may not have to guarantee to a P that any judgment obtained will be satisfied: Jackson v Sterling

   3. Seeks to operate in personam, not to improve position of claimants or deprive party subject to restraint of title or possession of assets: Cardile however in reality there ill be a very tight ‘negative pledge’ over the property and contempt sanction attached

When injunctions have been granted:

10. Factors tending in favour of not granting injunction:

    1. Requires a high degree of caution because breaching the court order can mean that the party is held in contempt: Cardile

    2. Also difficulties in quantifying and recovering damages pursuant to undertaking if it should turn out that the order should have been granted: Cardile

11. Grounds on which an injunction will fail: from Jackson v Sterling

    1. If require appellant to pay into court not money identified as being within possession but money required to provide regardless of source: Jackson v Sterling

    2. beyond mere order for preservation of assets, they required that money be paid into court as security: Jackson v Sterling

    3. Failed to identity either what the money paid ‘to an registrar’ was to secure or what the entitlement of the appellant was in relation to it after it has been paid: Jackson v Sterling

12. For injunction to be within power: If order had been restricted to injunctive relief preventing appellant from disposing of so much of the money or assets representing that money as remained in his possession. However the orders in this case did not go to creating security or the preservation of assets within control of appellant.

Freezing orders against third parties:

13. Discretionary considerations:

    1. Issues: (a) has applicant proceeded diligently and expeditiously (b) are proceedings available against third party (eg civil conspiracy) (c) why ifsome proceedings are available why have they not be taken (d) why if proceedings are available against third party, should not the grant of relief be conditioned upon an undertaking by the applicant to commence and ensure so far as is possible the expedition of such proceedings. ‘Difficult to conceive of cases where such an undertaking would not be required’.

14. In Eagle Homes:

    1. LED sued Eagle Homes for infringing LED’s copyright in building plans - Cardile were only shareholders in Eagle homes - LED was litigating claim against Eagle Homes, Homes paid large dividends to Cardiles who set up another company they controlled. - LED obtained judgment against Eagle Holmes for...