In this practice area
Civil claims arising from fraud, deceit and misrepresentation, and the steps used to trace, freeze and recover misappropriated money and assets.
What these matters involve
Commercial fraud takes many forms: an employee or director diverting company funds, an investment induced by false statements, fake invoices, a counterparty who never intended to perform, or a business sold on the strength of inflated accounts. The victim usually has two concerns. The first is establishing liability. The second, and often harder, is finding the money and getting it back.
Speed matters. Once a fraud is discovered, assets can be moved or dissipated quickly, and evidence can disappear.
The legal framework
The tort of deceit requires a false representation, made knowingly or recklessly, intended to be relied on, which induced the claimant to act to its loss. Misrepresentation claims are also commonly brought under section 18 of the Australian Consumer Law, which prohibits misleading or deceptive conduct in trade or commerce and does not require proof of dishonesty. Where the wrongdoer was a fiduciary, such as a director or employee in a position of trust, claims for breach of fiduciary duty may be available.
Equity offers remedies aimed at recovering property rather than just compensation. A claimant may trace misappropriated money into the assets it was used to acquire and claim a constructive trust or equitable lien over them. Third parties who knowingly received property in breach of trust or knowingly assisted in a dishonest breach of fiduciary duty can be made liable under the principles in Barnes v Addy. Contracts induced by fraud may be rescinded.
The court's procedural tools are just as important. Freezing orders restrain a defendant from dealing with assets. Search orders preserve evidence. Preliminary discovery under rules 5.2 and 5.3 of the Uniform Civil Procedure Rules 2005 (NSW) can identify an unknown wrongdoer or obtain documents needed to decide whether to sue. Subpoenas to banks can reveal where money went. Under section 55 of the Limitation Act 1969 (NSW), where a cause of action is based on fraud or has been fraudulently concealed, the limitation period does not begin to run until the claimant discovered, or could with reasonable diligence have discovered, the fraud.
How these matters typically run
The first phase is usually fast and confidential: securing the evidence, identifying the assets and, where justified, applying without notice for freezing or search orders. Forensic accountants often trace transactions through bank records. The second phase is the substantive claim, which may involve several defendants, including recipients of the funds and those who assisted.
Fraud allegations must be clearly pleaded and properly particularised, and courts expect cogent evidence before making findings of dishonesty. Where there is parallel police or regulatory involvement, the civil claim must be managed so that it does not compromise that process or the client's position.
How we act
We act quickly to preserve assets and evidence, then build the case with the tracing and documentary proof that fraud claims demand. We also act for defendants facing fraud allegations, including third parties accused of knowing receipt or assistance.