Cold War: Court refuses freezing order against Russian national

Mrs Valentina Woodley (the Respondent) moved from Russia to start a new life with Mr Terry Woodley. The couple married and had two children.

Mr Woodley died in a car accident in early 2019. The Respondent was named the executor of Mr Woodley’s Will and sole beneficiary of his estate. Their children were aged four and six at the time of Mr Woodley’s death.

Prior to his death, Mr Woodley was involved in litigation with his brother, Ross, and his sister-in-law, Roslyn (the Applicants). Mr Woodley owed the Applicants roughly $900,000.00 from costs orders made against him.  The Applicants sought to enforce the debt against Mr Woodley’s estate.

The estate included four properties, to which the Respondent was beneficially entitled. To prevent the Respondent from selling or disposing of the properties and possibly transferring the proceeds of sale to Russia, the Applicants applied for a freezing order restraining the Respondent from dealing with them.

Freezing orders

Under Order 52A Rule 5 of the Rules of the Supreme Court, the Court may make a freezing order against a judgment debtor if the Court is satisfied that there is a danger that a judgment will be unsatisfied because:

  • the judgment debtor absconds; or
  • the assets of the judgment debtor are:
    • removed from Australia; or
    • disposed of, dealt with or diminished.

There must be a real or substantial risk that the assets will be disposed of. In deciding whether to make a freezing order, the Court considered:

  • the strength of the Applicants’ case;
  • the risk of dissipation of the assets; and
  • the balance of convenience.

The Court found that the Applicants had a strong case and that it could fashion a freezing order that would mitigate any prejudice to the Respondent.

However, the Court was not persuaded that there was a real or substantial risk of asset dissipation for the following reasons:

  1. although the Respondent was still a Russian citizen, she had established a life with her children in Western Australia;
  2. it would be difficult for the Respondent and her children to move to Russia, as her children were born in Australia and only spoke English; and
  3. the Respondent had attended to Mr Woodley’s estate diligently.

Accordingly, the Court dismissed the application.

Lavan Comment

Enforcement of a judgment debt is not always a simple process. There are many different enforcement options which a creditor must consider very carefully.

Although a freezing order can prevent dissipation of assets, the Court will not grant such an order lightly. There must be a real and substantial risk that important assets will be removed from the jurisdiction which would impact on the judgment debtor’s ability to satisfy the judgment debt. 

These matters can become more complex in the context of a deceased estate.

If you require advice on enforcing a judgment debt or securing a debt to mitigate your risk, please do not hesitate to contact Andrew Sutton or James Steedman.