Background
Following the trial judgment and final orders against Connie Stojic and Buildquip Pty Ltd, the plaintiffs sought an urgent freezing order. Mrs Stojic had given notice that she intended to refinance the mortgage over her South Coogee property before the existing loan expired. The defendants said the refinance was needed to discharge the existing $3.02 million loan, meet refinancing costs, and fund a prospective appeal.
The plaintiffs valued the property at $6.7 million and sought to prevent the defendants from using assets other than for refinancing. They relied on adverse credit findings against Mrs Stojic and argued that her asserted financial circumstances and her accountant’s certificates suggested undisclosed income sources. The defendants relied on their longstanding compliance with an earlier undertaking not to deal with the property without notice.
The Court’s Holding
Justice Needham dismissed the application for a freezing order. A freezing order is an extraordinary and drastic remedy, intended to prevent frustration or abuse of the Court’s processes rather than provide security for a judgment. On the evidence, the identified risks did not justify that remedy: there was no indication that Mrs Stojic or Buildquip was seeking to dissipate or conceal assets.
The Court accepted an undertaking in place of a freezing order. It permitted refinancing up to $3.52 million, covering the existing loan and refinancing costs, with the balance held in the defendants’ solicitor’s trust account and available for appeal legal fees. The Court allowed $350,000 for reasonable appeal costs but declined a $78,000 living-expenses allowance because Mrs Stojic had sworn that her husband had agreed to meet the family’s ordinary expenses while she sought work. The plaintiffs were ordered to pay the defendants’ costs.
Key Takeaways
- A freezing order requires evidence of a real risk that assets will be dissipated or concealed; adverse credit findings alone did not establish that risk here.
- A sufficiently broad undertaking restraining dealings with assets can protect judgment creditors without imposing a freezing order.
- Refinancing may be permitted to fund reasonable appeal costs, but the Court may limit the amount and require the funds to remain in a solicitor’s trust account.
Why It Matters
The decision illustrates the Federal Court’s caution in post-judgment asset-preservation disputes. Even where the judgment debt exceeds the apparent equity in a property, the remedy depends on demonstrated dissipation risk, not merely the creditor’s need for security.
It also shows that undertakings can be tailored to preserve assets while allowing a proposed appellant to refinance and obtain reasonable funding for an appeal.