Author: Nicola Sharp
28 December 2023
3 min read
In 2023, a number of applicants sought the court’s help in tracing assets that were procured as a result of fraud. We look at a few notable cases in 2023 for applicants seeking Bankers Trust Orders, Norwich Pharmacal relief, and worldwide freezing orders.
Can English courts grant bankers trust orders (BTO) against banks in foreign countries in respect of conduct outside its jurisdiction? This case answered that question with a ‘no’.
The claimants had fallen victim to a fraudulent investment scheme, and they sought to recover their money from the unknown individuals behind it. In order to trace the assets and identify the fraudsters, the claimants sought BTOs from two Australian banks.
The banks said that complying with the BTOs would put them in breach of their duty of confidentiality under local laws. An alternative remedy was available under Australian law, which the banks said they would not oppose.
The court sided with the banks and reiterated that the general rule is that a disclosure order should not be made against foreign entities in respect of conduct outside its jurisdiction. Only in exception circumstances can the general position be overruled.
For more analysis, read our article.
This was the latest application in lengthy, high profile litigation. Back in 2019, the court granted a WFO to freeze the defendant’s assets to the value of £1.34 billion. Later in the year, the Court of Appeal allowed the defendant (now a bankrupt) to increase his living expenses from £80K to £310K.
This application was to decide whether the defendant could sell a property in Belgravia, which was subject to the WFO, in order to pay for his defence costs.
Interestingly, the claimant bank did not object to the variation. Instead, it was the trustee in bankruptcy who opposed the application. But the court considered that the trustee was effectively seeking to get the benefit of an injunction without paying the usual price (seeking the injunction and offering a cross-undertaking).
The application was granted and he was permitted to sell the property. Without the sale proceeds, he did not have the funds to meet his legal bills, and the court took that into account.
For further analysis on this case, read our article.
One of the American Cyanamid principles in support of proprietary claims is whether or not there is a serious issue to be tried. If an applicant can’t establish that there is a serious issue to be tried, their application for a proprietary injunction will fail.
It is usually the case that unless the claim is “obviously misconceived” a court is likely to proceed on the basis that there is a serious issue to be tried.
In this case, the court granted the proprietary injunction but emphasised that the reason for doing so was to protect the funds for the applicant, in the event that the arbitrator decided the dispute in their favour. The judge did not express a view as to which party had the better of the arguments.
Proprietary injunctions prevent a defendant from dealing with particular assets over which the claimant asserts a proprietary right pending trial. In the interests of justice, the courts are often inclined to grant these applications, so long as the applicant satisfies the American Cyanamid test and unless there is a clear reason not to.
Further reading on this case can be found here.
In this case, it was agreed that a freezing order can be granted in respect of contingent claims. But the main point of contention was whether the underlying claim brought by the claimant (AMT) in the principal claim was relevant to the question of whether the defendant (Uniserve) had a good arguable case against the parties to the contingent claim.
The judge decided that the strength of the underlying claim from AMT against Uniserve must be relevant. If AMT’s case is very weak against Uniserve, necessarily Uniserve’s case is weak against the parties to the contingent claim. That, in turn, weakens the argument for so intrusive a remedy as a freezing order.
Read more on this here.
The Supreme Court allowed Norwich Pharmacal relief after it was refused in Mauritius.
This particular decision revolved around the potential conflict between section 64 of the Banking Act 2004 (applicable in Mauritius) and the Norwich Pharmacal jurisdiction to allow a disclosure order for information relating to the identities of certain of the bank’s customers.
The Privy Council found it would be “remarkable” if the Banking Act 2004 had the effect of preventing the court from exercising what is an important jurisdiction to assist victims of fraud. That was clearly not the purpose of section 64.
The Supreme Court overturned the decision of the court in Mauritius and considered it ‘just and convenient’ to grant the order.
Find out more about this case here.
Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.