An extract from The Asset Tracing and Recovery Review, 8th Edition

Seizure and evidence

i Securing assets and proceeds

In the case of fraud, there is an obvious risk of assets that would otherwise be available to meet a judgment being moved or dissipated. A party may apply to the court for a freezing order, or Mareva order, to preserve assets in aid of a contemplated proceeding in order to prevent abuse of the court's process.

An applicant seeking a freezing order will typically bring an ex parte application for it. To obtain a freezing order, the applicant must, inter alia:

  1. prove that judgment has been given in its favour or that it has a good arguable case on its claim;
  2. prove by evidence that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because the relevant assets might be, for example, removed or disposed of. The applicant does not need to provide demonstrable proof that, absent the making of an order, assets will inevitably be disposed of. Rather, the court will consider whether there is a real risk that assets will be dealt with so as to prevent the satisfaction of a judgment. As to evidence, in a case concerning a misappropriation of company funds by a director, evidence might be led of the director's lack of probity. Other relevant evidence might include the respondent's corporate structure, the nature of its assets, evidence of past disposals of assets and any evidence of an intention to transfer assets; and
  3. give an undertaking as to damages.

Orders can also be sought against third parties who hold or control assets beneficially owned by a respondent (e.g., banks).

If an ex parte freezing order is made by the court, it operates only until the first inter partes return date. On that occasion, the applicant bears the onus of establishing why the order should continue, and the respondent will have the opportunity to argue as to why the order should be discharged.

Asset disclosure orders

In addition to a freezing order, the court has the power to make ancillary orders for the purpose of obtaining information about the frozen assets, or as to whether an order should be made at all. The most common type of order made is that the respondent disclose, by way of affidavit, the nature, value and location of its assets.

ii Obtaining evidenceSearch orders

A party seeking to preserve evidence for use in a proceeding may apply to the court to obtain a search order, also known as an Anton Piller order after the decision in Anton Piller KG v. Manufacturing Processes Ltd.

An application for a search order is brought ex parte. To obtain a search order, the applicant must show:

  1. a strong prima facie case on an accrued cause of action;
  2. that if a search order is not made, the potential or actual loss to the applicant will be serious; and
  3. sufficient evidence that the respondent possesses important evidentiary material, and that there is a real possibility that the respondent might destroy that material or cause it to be unavailable for use in a subsequent court proceeding. The requirement for showing a real possibility of destruction of evidence will typically require evidence of fraud or dishonesty on the part of the respondent.

Some practical matters that arise in the context of a search order are as follows:

  1. the court requires that the search party must include an independent solicitor, nominated by the applicant and appointed by the court to supervise and report back on the search;
  2. the proposed orders must list the items to which the search order will apply. Where the premises are likely to include electronic items, it is useful to include a provision requiring that the search order cover any cloud data that is not physically held on the premises but is accessed through electronic equipment on the premises;
  3. the orders must also list the people who will comprise the search party. It may be necessary to include an independent computer expert who can identify, search and image electronic materials;
  4. the materials obtained during a search order are kept in the custody of the independent solicitor until the first inter partes return date. On the return date, the court will consider what is to be done with the seized materials and any claims of confidentiality or privilege in the materials; and
  5. a separate application must be brought for access to the seized materials.
Restricted travel

The Australian courts have jurisdiction to make orders restraining a defendant from leaving the jurisdiction and requiring the delivery up of any passports.

Pre-action discovery and subpoenas

Before commencement of proceedings, evidence can also be obtained by an application for pre-action discovery from the proposed defendant.

Third parties who were somehow involved in and facilitated the wrongdoing (even innocently) can be ordered to give limited discovery for the purposes of identifying the proper defendants to a proposed action (a Norwich Pharmacal order). Where a proceeding is on foot, material can be obtained from third parties by issuing subpoenas requiring the third party to produce relevant documents to the court.

ASIC examinations

In circumstances in which ASIC is investigating a wrongdoing, it may conduct private examinations of persons it believes can give information relevant to the matter. ASIC may then give a copy of a written record of that examination, together with a copy of any related book (document), to a person's lawyer if the lawyer satisfies ASIC that the person is carrying on, or contemplating, a proceeding in respect of the matter that was the subject of the investigation. Subject to some limited exceptions, the record of that examination is admissible as evidence in a subsequent proceeding against the wrongdoer.