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Push payment fraud and freezing injunction update

FRAUD on spreadsheet Print publication

05/07/2019

Rachel Elgar explains why injunctions against ‘persons unknown’ can be a tactically and financially worthwhile option.

World Proteins Kft litigation: The latest instalment

In May 2019 we reported on the case of World Proteins Kft v Persons Unknown [1] in which the court granted a freezing injunction against ‘persons unknown’, where the respondent was an unnamed cyberfraudster.  Ancillary to the freezing injunction, the bank records of the account into which defrauded sums had been paid were disclosed, which led to the identification of the fraudster and his UK address.

We explained in our earlier briefing some of the various options open to a lender, customer or other business or person finding themselves to be a victim of fraud. The latest instalment of the World Proteins Kft litigation [2] serves to prove that pursuing urgent injunctive action in such cases can be a tactically and financially worthwhile option.

On 1 July, just a few short weeks after the freezing injunction hearing – and directly as a result of the assets having been frozen and the fraudster having been identified – the High Court granted default judgment in the claimant’s favour, declaring that all sums held by the respondent as a result of his fraud must be returned to the claimant within 14 days.

The freezing injunction (and ancillary orders) against persons unknown therefore acted as a pre-cursor to the swift and decisive resolution of the matter via default judgment, which will result in the almost immediate return of €500,000 which could otherwise have been lost forever to fraud.

In granting this relief, the High Court also made the following points, which will be of interest and assistance to future claimants:

  • It would not be right for the court to hold that declaratory relief could never be given on default judgment.
  • Rather, the better rule is that declarations should not be given without inter-parties argument except in the clearest of cases.
  • ‘The clearest of cases’ could include cases that were less clear-cut than the instant scenario.
  • It was relevant that the default judgment application had been properly notified to the respondent and that he had not replied. On the evidence it was clear that it would be disproportionate and unnecessary to expect the claimant to jump through further legal hoops before receiving an order that it should be recompensed.
  • Even if the funds had been mixed with other monies, that did not rebut the presumption that they belonged to the applicant. (Any such argument would have to be proved by a respondent.)

If you would like any further advice or assistance on push payment fraud, fraud generally, freezing injunctions or any other type of emergency/protective/ action or civil remedy, please do not hesitate to contact Rachel Elgar or any member of Walker Morris’ Banking & Finance Litigation Team.

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