A judgment against a defendant who has moved everything offshore is worth nothing. A freezing order — known elsewhere as a Mareva injunction — addresses that risk.
Where it comes from
Constitution section 155(4) — the National Court may make such other orders as are necessary to do justice in the circumstances of a particular case. This is the principal foundation for a remedy the Rules do not name.
Constitution section 166(1) — the Court is one of unlimited jurisdiction.
National Court Rules 1983 Order 14 Rule 10 — in proceedings concerning property, or in which a question may arise as to property, the Court may make orders for the detention, custody or preservation of the property, and, where the proceedings concern the right of any party to a fund, may order that the fund be paid into Court or otherwise secured.
Order 14 Rule 10 operates where the proceeding concerns particular property — the very land, goods or fund in dispute. See preserving property until trial.
A freezing order is different. It is not directed at property in dispute at all. It restrains a defendant from dissipating their own general assets so that a money judgment can be satisfied. That is why section 155(4) does the work.
The elements
The usual requirements apply — a serious question to be tried, adequacy of damages, balance of convenience, and an undertaking as to damages. A freezing order additionally calls for:
- A good arguable case on a claim for a monetary sum — a higher threshold than the bare serious question.
- Assets within the jurisdiction, or assets the Court can practically reach, identified as specifically as the evidence allows.
- A real risk of dissipation or removal — the critical element.
- That the balance of justice favours the order, weighing the harm of freezing a defendant’s assets against the risk of an unenforceable judgment.
It is not enough that the defendant might lose the case and might then be unable to pay. There must be evidence from which the Court can infer a real risk that assets will be put beyond reach.
Evidence that supports the inference: assets already being transferred or listed for sale without explanation; accounts being closed or emptied; a company being stripped; a defendant disposing of PNG assets while relocating; dishonesty going to the claim itself; previous evasion of creditors or judgments.
Evidence that does not: that the defendant is a foreign company; that they are in financial difficulty; that they have declined to pay. Insolvency is a reason to consider proceedings under the Insolvency Act (Chapter 253) or the winding-up provisions of the Companies Act 1997, not a reason to freeze assets.
What a properly drawn order contains
| Term | Purpose |
|---|---|
| A maximum sum frozen | The order should not reach assets beyond the value of the claim |
| Identified assets where possible | Named accounts, titles, vehicles — rather than everything the defendant owns |
| Exception for ordinary living expenses | A defendant must be able to live |
| Exception for ordinary business expenses | A freezing order is not a means of closing a business down |
| Exception for legal costs | A defendant is entitled to defend the claim |
| A return date | Required where the order was made ex parte |
| Liberty to apply | So the defendant or a third party can come back quickly |
| An asset disclosure requirement | The order is difficult to police unless the defendant states what they hold |
| A fortified undertaking | Security may be required — Order 14 Div 4 |
An order without them is liable to be discharged as oppressive. A freezing order exists to preserve assets for execution, not to strangle a defendant into settling. Draft the exceptions into the order yourself; do not wait for the Court to insist.
Notice to those who hold the assets
A freezing order operates in personam against the defendant, but a bank or other third party who knows of the order and helps to defeat it may itself be in contempt.
Practical steps: serve the sealed order on each bank promptly; identify accounts precisely, since a bank cannot be expected to search on a vague description; and include an undertaking to meet the reasonable costs a third party incurs in complying. Under Order 6 Rule 17, notice of an interlocutory injunction may be given by telegram or letter signed by or on behalf of the Registrar — useful when speed matters.
A third party affected by the order may apply to vary it, and should be given liberty to apply on the face of the order.
Before you apply
Disclosure. These applications are almost always made without notice, so the duty of full and frank disclosure is at its height. In Golobadana No 35 Ltd v Bank of South Pacific Ltd [2002] PGNC 36; N2309 the Court treated non-disclosure as a ground for lifting an injunction obtained ex parte.
Exposure. The undertaking as to damages on a freezing order can be very large, because the loss caused by freezing a trading business is large.
Finding the assets. Where you do not know what the defendant holds, consider whether Order 3 or, after judgment, examination of the judgment debtor is the better route.
Alternatives. Where the dispute concerns identified property, Order 14 Rules 10 and 11 are simpler and better fitted. Where a fund is in issue, ask for it to be paid into Court or otherwise secured under Rule 10(3).
Sources
- Constitution — ss 155(4), 166
- National Court Rules 1983 — O 3; O 6 r 17; O 13; O 14 rr 9–16, Divs 4, 6
- Golobadana No 35 Ltd v Bank of South Pacific Ltd [2002] PGNC 36; N2309
- Insolvency Act (Chapter 253); Companies Act 1997
Before relying on anything here, read the current text of the National Court Rules 1983 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.