The answer may be to obtain an asset freezing order from the Courts.
Such an order is a critical weapon in the fight against white collar crime. These orders are also known as ‘Mareva’ orders, after the 1975 English case in which such an order was first famously made.
Freezing orders substantially restrict a white collar criminal from dealing with their assets, up to a value specified by the Court. For example, a freezing order could restrict an individual from dealing with $1 million of their assets. This is regardless of whether that individual actually has total assets worth more, or less, than $1 million.
Freezing orders are therefore sometimes sought by white collar crime victims before commencing civil proceedings alleging that a white collar crime has taken place. The freezing order ensures that a white collar criminal cannot transfer or hide assets before the civil proceeding provides judgment for the victim.
Given they substantially restrict a person’s proprietary rights, freezing orders are very serious and Courts do not grant them lightly. A freezing order will be made (assuming other criteria are met) if the Court is satisfied that there is a real risk that the white collar criminal will dissipate assets. The Court will usually accept this risk exists if there is evidence of actual dishonesty or fraudulent behaviour by the perpetrator.
A party seeking a freezing order should keep the following in mind:
- Act quickly. Any delay in approaching the Court to seek a freezing order – even by one day – weakens your case. For this reason, once you are on notice of a potential civil claim related to white collar crime where freezing orders may be appropriate, you should move immediately to investigate the matter, and should involve your lawyers at the earliest possible opportunity.
- Be ready to go to Court urgently. This is connected with the need to avoid delay. Do not be surprised if you are in Court the same day you inform your lawyers about the possible white collar crime.
- Keep it quiet. Do not inform the alleged white collar criminal that you are proposing to obtain a freezing order against them. The element of surprise is crucial, otherwise the alleged perpetrator may have time to move cash out of bank accounts or execute property transfers – exactly what your freezing order will prevent. Remember that the Court hearing for the freezing order will be ex-parte (that is, the perpetrator is not informed of the hearing and does not participate).
- Third parties? Identify any other persons or companies that may control assets of the white collar criminal. This will usually be banks where the perpetrator holds accounts. Be organised so that you can put those banks on notice of the freezing order as soon as it is granted – your lawyers can assist with this process. Note though that overseas financial institutions will likely not abide by Australian Court orders. We will address ways to freeze assets overseas in an upcoming post.
- Defend yourself. If a freezing order is made, the Court will also schedule a further hearing where the perpetrator will have an opportunity to object to the freeze. That hearing will usually only be a few days later. Accordingly, you should be prepared for a busy period of work after a freezing order is initially granted, as you and your lawyers prepare to defend the freezing order.
McCullough Robertson is experienced in obtaining and maintaining freezing orders in civil proceedings connected with white collar crime. Clients who consider they may need to obtain a freezing order should contact us as soon as possible to discuss their options.
+61 7 3233 8634