Civil Fraud
‘Civil fraud’ is a general term used to refer to allegations of dishonesty, bad faith and/or unconscionable behaviour, which often arise in the context of commercial disputes.
Civil fraud claims are private actions pleaded in civil courts. The causes of action are various and might include deceit, bribery, conspiracy, causing loss by unlawful means, inducing breach of contract, breach of trust and fiduciary duty, knowing receipt, unjust enrichment and rescission, among others.
Injunctive Relief
In many civil fraud claims, claimants will have legitimate concerns about defendants continuing to act in bad faith by disposing of assets or destroying evidence. Consequently, many civil fraud claims commence with ex-parte applications (without notice to defendants), which might include applications for freezing orders, proprietary injunctions, search and/or imaging orders and appointment of receivers, among others.
Burden and Standard of Proof
The general rule that “they who asset must prove” will apply in most civil fraud claims. A claimant will bear the burden of proving each element of each cause of action. A defendant will bear the burden of proving any defence it raises.
The standard of proof in civil proceedings (except proceedings for contempt of court), including civil fraud claims, is the balance of probabilities.
Remedies
The remedies available to a successful claimant in a civil fraud case are wide-ranging and include damages, equitable compensation, restoration, accounting, rescission, restitution, constructive trusts, injunctions and orders for specific performance, among others.
Enforcement
Enforcing judgement in a civil fraud claim can often be more difficult and complex than succeeding in the claim itself, to the extent that claimants who pursue civil fraud claims without considering enforceability, risk a Pyrrhic victory.
There are various tools available to assist claimants to enforce judgements, including post-judgement injunctions and search orders, and judgement creditors have a right to seek examination of a defendant; however, the ultimate tool of coercion (and punishment) is committal to prison for contempt.
Tactical considerations
Pleading a claim in civil fraud can have significant tactical advantages including delaying the limitation period, removing the privilege against self-incrimination in certain civil proceedings relating to property, lifting the corporate veil, removing the defence of contributory negligence, rendering limitation or exclusion clauses ineffective and increasing the scope for recoverable damages, among others. Civil fraud is also one of the last remaining areas in which orders for expansive disclosure can be sought and granted.
However, it is equally the case that pleading a claim in civil fraud can have tactical disadvantages, including affecting the potential for recovery (a defendant’s insurance policy might not cover dishonest or criminal acts) and risking potential indemnity costs consequences if a claimant fails to establish its claim at trial or elects to discontinue its claim pre-trial.
How our expert litigators can help
Litigating a civil fraud claim is fraught with complex factual, procedural, tactical and strategic considerations.
We can deploy a multi-disciplinary team of litigators to devise and execute bespoke litigation strategies, tailored to each civil fraud claim. We benefit from a wealth of in-house expertise in several disciplines including civil fraud, criminal fraud, proceeds of crime, civil recovery and regulatory. We enjoy enduring relationships with leading consultants, including specialist fraud barristers, forensic accountants and other industry experts.
We can act for clients facing criminal and civil proceedings, simultaneously.
Free Initial Discussion
If you are the victim of fraud and wish to discuss issuing a claim in civil fraud and/or seeking injunctive relief to freeze assets or preserve evidence, you should contact us as soon as possible.
If you are accused of fraud and wish to secure representation to defend a claim in civil fraud or to respond to an application for a freezing order or a search and imaging order or another form of injunctive relief, you should contact us as soon as possible.
