An extract from The Asset Tracing and Recovery Review, 8th Edition
Seizure and evidence
Where the perpetrator of a fraud is the subject of a criminal investigation, the investigating authorities have wide-ranging powers under the Criminal Procedure Code to search premises and seize evidence, access computers and freeze assets.
It is in the area of civil claims that seizure of assets and obtaining evidence from third parties is more complicated, and we set out below the general procedural mechanisms commonly relied upon by victims of fraud in civil claims.i Securing assets and proceedsMareva injunction
Where civil claims in respect of fraud are concerned, a plaintiff can apply to seize and secure assets or the proceeds of fraud via court proceedings. This is most commonly done by way of a Mareva injunction or freezing order. An application for a Mareva injunction is usually taken out at the same time as the commencement of civil proceedings so as to ensure that the defendant does not have notice of the proceedings and time to shift assets.
The court can grant a domestic Mareva injunction (i.e., over assets held in Singapore) where the following conditions are met:
- there is a valid cause of action over which the court has jurisdiction that the domestic Mareva injunction is collateral to;
- there is a good arguable case on the merits of the plaintiff's claim, although this does not require the court to find a more-than 50 per cent chance of success;
- the defendant has assets within the court's jurisdiction. This includes all assets beneficially held by the defendant, but excludes assets that the defendant legally owns but holds on trust for third parties; and
- there is a real risk that the defendant will dissipate his or her assets to frustrate the enforcement of an anticipated judgement by the court.
As for an extraterritorial Mareva injunction (i.e., over assets held outside of Singapore), this can be granted by the court if the same conditions as a domestic Mareva injunction are present, subject to the following modifications:
- a valid cause of action must accrue in Singapore; and
- it must be shown that the defendant has assets outside the court's jurisdiction. Furthermore, if the defendant has assets both within and outside the court's jurisdiction, it must then be shown that there are insufficient assets within the court's jurisdiction to satisfy the plaintiff's claim.
As part of an application for a Mareva injunction, a plaintiff will be required to provide an undertaking to comply with any order for damages (sustained by the defendant and third parties as a result of the Mareva injunction) that the court may make.
To support this undertaking, the plaintiff may be required to:
- make a payment into court;
- provide a bond by an insurance company that has a place of business in Singapore;
- provide a written guarantee from a bank that has a place of business in Singapore; or
- make a payment to the plaintiff's solicitor that is to be held by the solicitor as an officer of the court pending any order for damages.
An application for a Mareva injunction also requires full and frank disclosure, in that the court must be fully informed by the plaintiff of all material facts. Where an application for a Mareva injunction does not contain all material facts, and this is brought to the attention of the court by, for example, the defendant, this may thwart the plaintiff's attempts to seize or secure the defendant's assets.
In Singapore, the courts have also held that, in principle, evidence of a collateral or ulterior purpose on the part of the plaintiff could justify the refusal of a Mareva injunction, although this would ordinarily be difficult to establish at an early stage of proceedings in which Mareva injunction applications are usually brought.ii Obtaining evidenceAnton Piller order
In respect of obtaining evidence in the context of civil claims in respect of fraud, a plaintiff can apply to search premises and seize evidence by way of an Anton Piller or a search and seizure order. Similar to a Mareva injunction, this is usually done at the same time as the commencement of civil proceedings, so as to ensure that the defendant does not have notice of the proceedings and time to destroy evidence.
An ex parte Anton Piller order may, in general, be granted if the following conditions are met:
- there is an extremely strong prima facie case of a civil cause of action;
- the potential or actual damage to the plaintiff that the plaintiff faces if the Anton Piller order is not granted is serious;
- there is clear evidence that the defendant has incriminating documents or items in his or her possession; and
- there is a real risk that the defendant may destroy the above documents or items before an application inter partes can be made.
However, it is worth noting that even if the above conditions are met, a court may not necessarily grant an Anton Piller order. Rather, a court will only do so after determining that the prospective harm the plaintiff faces (as a result of the Anton Piller not being granted) outweighs the prospective harm that the defendant faces (as a result of the order).
As part of the application for an Anton Piller order, similar to an application for a Mareva injunction, the plaintiff will have to undertake to pay damages sustained by the defendant as a result of the Anton Piller order if so ordered by the court. In addition, the plaintiff must also undertake to comply with any order for damages that the court makes in connection with a finding that the actual carrying out of the Anton Piller order was in breach of the terms of the order made, or was otherwise inconsistent with the plaintiff's solicitors' duties as officers of the court.
To support this undertaking, the plaintiff may be required to take actions similar to those in an application for a Mareva injunction. An application for an Anton Piller order also requires full and frank disclosure of a similar nature to that required in an application for a Mareva injunction.Third-party discovery or bankers trust order
Where evidence needed for a civil suit in respect of fraud rests with a third party (rather than the defendant) or where there is a need, Singapore's civil proceedings provide for certain mechanisms to allow a plaintiff to obtain this evidence.
For example, where the identities of the perpetrators of a fraud have not been identified and there is a need to trace the property that the victim has been defrauded of, a prospective plaintiff may apply for a Norwich Pharmacal order (also known as an application for pre-action discovery).
Pre-action discovery, may, in general, be granted if the following conditions are met:
- the non-party possessing the relevant information must have been involved in the wrongdoing, although the non-party need not have necessarily caused or known of the wrongdoing;
- there is a reasonable prima facie case of wrongdoing by the unidentified perpetrators; and
- granting the order is necessary to enable the plaintiff to bring proceedings, or it is just and convenient in the interests of justice to grant the same.
Where a third party who has the evidence needed is a bank, a plaintiff may also apply for what is known as a bankers trust order to preserve or trace the proceeds of fraud residing with the bank. Generally speaking, an application for a bankers trust order is granted on similar grounds to a Norwich Pharmacal order and, where the court grants such an order, this will override the usual banking secrecy considerations that banks have in releasing information in respect of their customers' assets to third parties.