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  • Freezing orders can be breached by trust-to-office transfers of ‘frozen’ funds.
  • In some circumstances, solicitors (as well as clients) can be liable for contempt of court if frozen funds are used to pay unauthorised legal expenses.
  • Care is needed in drafting freezing orders – and once they are made, effective procedures are needed to ensure that they are not breached.

For many solicitors, the only prospect more stomach-churning than discovering trust account deficiencies would be facing contempt of court charges; for others, the only thing more stomach-churning than contempt of court charges would be problems with the trust account. So when both of these circumstances come together, and a firm of solicitors faces contempt charges arising from the alleged breach of freezing orders made on the application of ASIC, the overall scenario has the makings of a Very Bad Day at the Office.

This scenario arose in a decision of the Federal Court of Australia in Australian Securities and Investments Commission v One Tech Media Limited (No 3) [2018] FCA 1071 (‘One Tech). Although the contempt charges against the firm (which, for present purposes, can be called ‘the firm’) were dismissed, the Court identified ‘serious deficiencies in the processes adopted by [the firm] to ensure that payments out of its trust account were permitted by the [freezing] orders’ (at [47]). Accordingly, the case provides useful lessons on how to avoid the Very Bad Day at the Office being yours.

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