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High Court grants worldwide freezing order against persons unknown

  • United Kingdom
  • Financial services disputes and investigations
  • Litigation and dispute management - Freezing Orders

02-02-2018

CMOC v Persons Unknown [2017] EWHC 3599 (Comm)

Facts of the case

– the application arose as a result of persons unknown infiltrating the email account of one of the senior managers of CMOC. This resulted in a number of large unauthorised payments being made from CMOC’s bank account in London to various other banks around the world

– CMOC applied for a worldwide freezing order against those involved in the fraud. Their identities were unknown at the time of the application

The decision 

HHJ Waksman QC found that:

– the court has jurisdiction to grant an interlocutory injunction against persons unknown (Bloomsbury v News Group Newspaper [2003] EWHC 1205)

– there is no reason in principle why this jurisdiction should not extend to a freezing order and a strong reason for it doing so. This is because a freezing injunction can often be a springboard for the grant of  ancillary relief in respect of third parties which might be difficult to get off the ground unless there has been a primary freezing injunction, e.g. the obtaining of information from banks to assist in identifying some or all of the defendants

– permission should be granted to serve the application notice out of the jurisdiction on the basis that:

– there was a good arguable case that the tort gateway was fulfilled because damage was sustained in the jurisdiction (paragraph 3.1(9)(a) of PD 6B), or alternatively the restitutionary gateway (paragraph 3.1(16)) 

– if such jurisdiction were established against one of the defendants, paragraph 3.1(3) may provide an additional ground for service out since another defendant may be a necessary and proper party given that this is conspiracy claim 

– at this stage there is no other obvious appropriate forum as this is the jurisdiction from which the monies were taken

Analysis and practical advice

– this is an important decision (albeit the judgment is relatively brief) as it potentially obviates the need in appropriate cases for an applicant to seek an NPO in the first instance in order to identify the persons unknown. This should save both costs and time and in so doing reduce the opportunity for the alleged wrongdoer to dissipate the relevant assets

– however, where relying on this decision, applicants will need to ensure that their description of the persons unknown clearly differentiates between those who are to be caught by the order, and those who are not. With some amendments, the Judge in this case was satisfied with CMOC’s approach which made reference to (i) those who had been involved in the activities said to constitute the fraud and which CMCO set out in the body of the claim form and (ii) particular transfers from CMCO’s bank account which CMCO listed in a schedule. The other species of defendant was the legal or beneficial holders of the accounts into which CMCO’s money had been transferred

– in a further innovation, it is reported that the court served the order using Tresorit, an online cloud storage data service, and that two of the alleged fraudsters who had been subsequently identified were notified by Facebook