Civil asset recoveryParallel proceedings
Is there any restriction on civil proceedings progressing in parallel with, or in advance of, criminal proceedings concerning the same subject matter?
There is no automatic restriction. The question is considered under the court’s general discretion.
A stay of the civil proceedings may be granted if the court considers that there is a real danger of injustice in the criminal proceedings if the civil proceedings continue. The overriding principle is one of balancing the interests of justice between the parties. For a recent example of the application of these principles in favour of a company charged with a criminal offence, see Australian Securities and Investments Commission v Australia and New Zealand Banking Group Limited  FCA 964.
Although each case will be considered on its merits, the courts have become increasingly mindful of giving sufficient weight to the practical legal prejudice to an accused, in light of the privilege against self-incrimination, the cost of multiple legal proceedings and the accused’s right in the accusatorial process of criminal proceedings not to disclose any aspect of their defence.
In an appropriate case, the court may make orders enabling the civil proceedings to progress to a certain point (eg, made ready for hearing), and then be stayed until the criminal proceedings have concluded.Forum
In which court should proceedings be brought?
Each state or territory has a court system, and there is also a federal court system. There is a hierarchy of courts within each system, with the supreme court being the highest court in each state or territory. The High Court of Australia is the final court of appeal.
The court in which civil proceedings for the recovery of assets should be brought will depend on a variety of factors, including the amount claimed, the nature of the causes of action and relief sought, connecting factors to the forum and the location of the defendant’s known assets. Most claims in fraud matters of any significant size or complexity are brought in the relevant state or territory supreme court, all of which hear monetary claims above certain thresholds, as well as claims for equitable relief.Limitation
What are the time limits for starting civil court proceedings?
Limitation periods are generally governed by state and territory legislation.
In most jurisdictions, causes of action for breach of contract or in tort have a six-year limitation period from the date the cause of action accrued.
As far as equitable claims are concerned, in most jurisdictions the legislation only applies to a limited extent. However, where the legislation has no direct application to a cause of action founded in equity, the courts may nevertheless apply the statutory limitation periods by analogy.
In most jurisdictions, fraud postpones the running of the limitation period until after the claimant has discovered, or could with reasonable diligence have discovered, the fraud.
In limited circumstances, courts also have the discretion to extend the time to commence proceedings.Jurisdiction
In what circumstances does the civil court have jurisdiction? How can a defendant challenge jurisdiction?
The jurisdiction of courts can be defined by reference to the common law and (partly) statute. The foundation of jurisdiction for actions in personam is service of originating process.
Service can be effected on any person who is physically present, no matter how briefly, within the geographic jurisdiction of the issuing court. Service outside Australia must be authorised under the rules of the issuing court. Those rules take into account the effect of the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters 1965 (Service Convention), to which Australia is a signatory.
A foreign defendant may apply to set aside service or stay the proceedings on various grounds, including that service was not authorised by the relevant court rules, the forum chosen by the claimant was inappropriate (forum non conveniens) or that the dispute falls within the scope of a foreign exclusive jurisdiction clause to which the claimant had agreed.
A defendant who has been sued in an inappropriate Australian superior court can apply for the proceedings to be transferred to another superior court under the Jurisdiction of Courts (Cross-Vesting) Acts.Time frame
What is the usual time frame for a claim to reach trial?
The usual time frame for a claim to reach trial varies considerably depending on a number of factors, including the size, scale and complexity of the matter, and if there are concurrent criminal proceedings.
The Federal Court of Australia Act 1976 (Cth) aims to have disputes resolved ‘as quickly, inexpensively and efficiently as possible’ (section 37M). State and territory civil procedure acts also contain sections to similar effect.
It is rare for contested proceedings to reach trial in less than six months. Proceedings ordinarily reach trial in a period of six to 18 months. Of course, if civil proceedings have been stayed pending the outcome of concurrent criminal proceedings, then it might take far longer than usual for the claim to reach trial.Admissibility of evidence
What rules apply to the admissibility of evidence in civil proceedings?
Applicable rules of evidence in federal, state and territory courts are established by legislation enacted in the relevant jurisdiction. In particular, each jurisdiction has its own Evidence Act. These acts are based largely upon the common law, but expand upon it in various ways.
Evidence is admissible where it is relevant to a fact in issue, and is not otherwise excluded. Areas of potential exclusion include hearsay evidence, opinion evidence, tendency evidence, credibility evidence and privilege. Courts also have a general discretion to exclude or limit evidence.
Generally, evidence is admitted primarily through documents and written statements, in the form of affidavits, witness statements or statutory declarations. The latter are usually ‘read’ onto the record in court and serve as evidence in chief for that witness. The witness is then usually cross-examined and re-examined. In some matters, however, witnesses may be required to give the entirety of the evidence orally.Witnesses
What powers are available to compel witnesses to give evidence?
At the request of a party to proceedings, the court may issue a subpoena compelling a person to attend court to give evidence.
Except as otherwise provided by the uniform Evidence Acts, every person is competent to give evidence, and persons who are competent are compellable to give evidence (section 12). There are certain limited exceptions to compellability in proceedings within the uniform Evidence Acts. These include, for example, the Sovereign, the Governor General, the governor of a state, the administrator of a territory, a foreign sovereign or head of state of a foreign country and, in limited circumstances, a member of a house of parliament (section 15).
A person called to give evidence will, however, be entitled to refuse to answer specific questions if certain limited privileges apply (eg, privilege against self-incrimination or legal professional privilege).Publicly available information
What sources of information about assets are publicly available?
Publicly available sources of information about assets include the following:
- the Australian Securities and Investments Commission, which maintains company and business name registers containing information relating to companies such as registration status, officeholders and, in some cases, shareholders and financial statements;
- the Personal Property Securities Register, which is a national online register where details of security interests in personal property can be registered and searched, at least by a creditor; and
- state or territory-based land and property information bodies, which maintain records of interests in real property.
Can information and evidence be obtained from law enforcement and regulatory agencies for use in civil proceedings?
Information and evidence may be obtained through various means, as follows:
- making a request to the relevant agency for consideration in accordance with the agency’s guidelines or statutory obligations;
- making an application for access to documents held by government agencies under freedom of information legislation, subject to various exemptions; and
- (most commonly) a party to civil proceedings causing the civil court to issue a subpoena requiring the production of specific documents. Production will be subject to any claims for public interest immunity or legal professional privilege.
If material is obtained from foreign jurisdictions via mutual assistance channels for the purposes of a criminal investigation or proceeding, it is inadmissible in any civil proceeding unless the Attorney General approves of its use for the purposes of that other proceeding (section 43B of the Mutual Assistance in Criminal Matters Act 1987 (Cth) (MAA)).Third-party disclosure
How can information be obtained from third parties not suspected of wrongdoing?
A claimant can apply for a Norwich Pharmacal order (named after Norwich Pharmacal Co v Commissioners of Customs and Excise  AC 133) requiring a third party who has become relevantly involved in a transaction to disclose information that may be relevant to a potential claim, including the identity of the wrongdoer. It can be used for the purpose of tracing the disposition of monies obtained fraudulently (eg, by requiring a bank to disclose information).
In addition, court rules contain procedures for the obtaining of preliminary discovery to identify a prospective defendant or to decide whether to institute proceedings.
A party to proceedings may also cause subpoenas to be issued to third parties requiring them to attend court to give evidence or produce documents to the court, or both. A subpoena must be issued for a legitimate forensic purpose and, where documents are sought, identify those documents with reasonable particularity.
A party can also apply for an order for non-party discovery requiring a third party to disclose the existence of relevant documents.Interim relief
What interim relief is available pre-judgment to prevent the dissipation of assets by, and to obtain information from, those suspected of involvement in the fraud?
The key interim relief is a freezing order (Mareva injunction) and a search order (Anton Piller order). Both are exceptional remedies that are ordinarily sought on an ex parte basis.
To obtain a freezing order, the claimant must show that he or she has a good arguable case against the defendant and there exists a real danger that the defendant will deal with his or her assets in such a way as to wholly or partly deprive the claimant of the benefit of a final judgment. It will apply to the defendant’s assets, typically whether located in or outside Australia, up to a specified sum. The operation of the freezing order must not be frustrated by any third party who has notice of it (eg, banks). In appropriate cases, the court may make a freezing order against a third party.
A freezing order will ordinarily be accompanied by an order compelling the defendant to file an affidavit disclosing the nature and value of his or her assets. Other, less common, ancillary orders may include an order requiring the delivery of designated assets not specifically in issue in the proceedings or an order restraining the defendant from leaving the jurisdiction.
A search order compels the defendant to permit persons specified in the order to enter premises and to search for, identify and remove specified things. The key matters of which the court must be satisfied are that the claimant has a strong prima facie case against the defendant and that there is a real possibility that the defendant might destroy, or otherwise cause to be unavailable, important evidentiary material that is in the defendant’s possession.
A claimant can also seek other forms of interim relief. These include orders for the detention, custody or preservation of property that is the subject of the proceedings. The usual methods of preservation are an interlocutory injunction or appointment of a receiver.Non-compliance with court orders
How do courts punish failure to comply with court orders?
Courts have a wide discretion to impose sanctions for a failure to comply with the court’s orders, including making adverse cost orders against the defaulting party or its solicitor, or both, striking out a pleading, rejecting evidence, staying or dismissing the proceedings, and giving judgment.
Breach of a court order can also give rise to a charge of contempt. Penalties for contempt include the imposition of a fine, the sequestration of assets or, in serious cases, imprisonment. It is usually left to the offended party to enforce contempt.Obtaining evidence from other jurisdictions
How can information be obtained through courts in other jurisdictions to assist in the civil proceedings?
Australian superior courts have the power to make an order for the issue of a letter of request to the judicial authorities of a foreign country requesting the taking of evidence from a person in that country.
These requests are usually made pursuant to the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters 1970 (the Hague Convention) or a bilateral agreement with another country. If the foreign state is not a party to any such treaty, the request may still be made, but the receiving country is under no obligation to comply with the request.
An order for the sending of a letter of request is a discretionary one, and the party seeking the order must persuade the court that the discretion should be exercised because it ‘appears in the interests of justice to do so’. Legislation in most Australian jurisdictions requires the court to consider various matters in this regard.
A letter of request may also ask for the production of documents, at least where those documents are ancillary to the oral testimony of the witness. However, it remains unclear whether Australian courts have jurisdiction to issue a letter of request to a foreign country solely for the production of documents pursuant to the Hague Convention. In New South Wales (NSW), one judge has recommended that consideration be given to adopting a rule for the express conferral of the requisite power (Gloucester (Sub-Holdings 1) Pty Ltd v Chief Commissioner of Stamp Duties  NSWSC 1419).
Court rules in all jurisdictions now allow subpoenas to be served overseas in accordance with the Service Convention; however, where leave is required to issue a subpoena abroad, an Australian court would be unlikely to grant leave if it would result in a clear breach of international law or comity.Assisting courts in other jurisdictions
What assistance will the civil court give in connection with civil asset recovery proceedings in other jurisdictions?
Australian courts will assist parties in enforcing foreign judgments. Such judgments may be enforced by either registering the judgment under the Foreign Judgments Act 1991 (Cth) or at common law.
The High Court of Australia has confirmed that Australian superior courts may make a freestanding freezing order in aid of foreign proceedings in certain circumstances, including where there is a danger of an actual or prospective foreign judgment remaining unsatisfied if assets are removed from Australia (see PT Bayan Resources TBK v BCBC Singapore Pte Ltd  HCA 36).
State and territory supreme courts also have the power, following a request sent from a foreign court, to make orders requiring a person to give evidence or produce specified documents (but not give discovery) in aid of the foreign proceedings. If the foreign court is from a country that is not a signatory to the Hague Convention or a bilateral agreement with Australia, the request is to be sent via the diplomatic channel and will be considered and executed on the basis of comity.Causes of action
What are the main causes of action in civil asset recovery cases, and do they include proprietary claims?
The main causes of action in civil asset recovery cases include the following:
- in equity: breach of fiduciary duty or breach of trust;
- in tort: claims for deceit, detinue, conversion, conspiracy or inducing breach of contract;
- a restitutionary claim for monies had and received; and
- certain statutory actions under the Corporations Act 2001 (Cth) and the Competition and Consumer Act 2010 (Cth) (CCA).
In equity, third parties may also be pursued for ‘knowing receipt’ of trust property or ‘knowing assistance’ in a breach of fiduciary duty. Certain equitable claims may be proprietary in nature, such as where a beneficiary claims against a defaulting trustee for the recovery of trust property (or its traceable proceeds). In addition, it is well accepted that where property is acquired from another by theft, proprietary relief by way of imposition of a constructive trust will be granted where appropriate.Remedies
What remedies are available in a civil recovery action?
The main remedies available in a civil recovery action include the following:
- equitable compensation;
- equitable lien or charge;
- account of profits;
- constructive trust;
- order for restitution;
- order for delivery of goods; and
- relief under the Corporations Act 2001 (Cth) or the CCA (eg, for declarations, damages or compensation orders), or both.
A successful claimant will also be entitled to claim interest (both pre- and post-judgment) and legal costs, although usually only a proportion of the total legal costs can be recovered.Judgment without full trial
Can a victim obtain a judgment without the need for a full trial?
A victim can obtain a judgment without the need for a full trial, typically by obtaining either default or summary judgment.
A claimant may seek default judgment where the defendant fails to file a defence. Such a judgment will typically be given in the absence of the defendant. If the claim is for unliquidated damages, judgment may be given on liability only with damages to be assessed.
A claimant may obtain a summary judgment without proceeding to a contested final hearing, if it can satisfy the court that there is no real defence to the claim, or only a defence as to the amount of the claim. The court will not determine the proceedings summarily if there is a real question in dispute.
Under various statutory regimes, a victim (including a corporation) may also be able to make a claim for a victim’s compensation order against a convicted person for losses caused by the relevant criminal offence (see, for example, the Victims Rights and Support Act 2013 (NSW) (section 97)).Post-judgment relief
What post-judgment relief is available to successful claimants?
A freezing order may be available against a judgment debtor if the court is satisfied that there is a danger that a judgment will be wholly or partly unsatisfied because the judgment debtor absconds, or the assets of the judgment debtor are dissipated or removed from the jurisdiction, before the claimant can apply for one of the traditional forms of execution.
The court may also make ancillary orders, such as an assets disclosure order, an order appointing a receiver to the defendant’s assets or an order restraining a judgment debtor from departing the jurisdiction.
A judgment creditor may also obtain an order for examination of the judgment debtor requiring him or her to answer specific questions or produce documents to aid enforcement.Enforcement
What methods of enforcement are available?
The principal means of enforcement are as follows:
- writ of execution, granting the sheriff’s office authority to seize and sell a judgment debtor’s real or personal property, or both, and pay the net proceeds to the judgment creditor;
- garnishee order, which directs third parties owing money to the judgment debtor (eg, wages) to pay the judgment creditor directly;
- charging order, which operates to charge certain property in favour of the judgment creditor; and
- insolvency orders, for example, winding up a company or making an individual bankrupt to effect a distribution of the judgment debtor’s assets among creditors.
What funding arrangements are available to parties contemplating or involved in litigation and do the courts have any powers to manage the overall cost of that litigation?
Various funding arrangements are available to parties contemplating or involved in litigation.
Generally, lawyers can offer ‘conditional’ billing where the lawyer’s ability to recover his or her fees depends on whether the legal action is successful. Typically, no fee is charged if the legal action is unsuccessful and an ‘uplift’ percentage is added to the lawyer’s fees if the action is successful.
All jurisdictions currently prohibit damages-based fee arrangements where the lawyer’s fee is calculated by reference to a percentage of any amount recovered by the client. The Productivity Commission in its 2014 report ‘Access to Justice Arrangements’ recommended that this prohibition be removed for most civil matters, subject to comprehensive disclosure requirements and percentage limits on a sliding scale. However, this recommendation has proved to be contentious and it is uncertain whether reform will occur.
Third-party funding, whereby a party with no pre-existing interest in the proceedings funds the litigation in exchange for a share of the amount recovered, is permitted. The market for such funding is well established and active, particularly in the class actions space. It is not uncommon for multiple plaintiff law firms, each with separate funding arrangements, to commence ‘competing’ class actions against the same defendant. Courts have broad powers to make orders dealing with such a scenario, including consolidation, a permanent stay of particular proceedings, declassing or class closure. In Perera v GetSwift Limited  FCA 732, the court made orders staying two of three competing class actions and permitted only one action to proceed after a consideration of all relevant factors, including innovative ways proposed by the successful plaintiff firm to seek to reduce legal costs.
After-the-event insurance is available but rarely obtained.
Courts seek to manage the costs of litigation in various ways, including by exercising broad case management powers. Generally, these powers must be exercised to facilitate the just, quick and cheap resolution of the real issues in the proceedings. In addition, courts have a wide discretion in relation to costs and can make interim costs orders against a party, including against parties in default.