Commercial fraud

We provide experienced legal advice on the various types of financial and business fraud, with particular experience in fraud by company directors and employees.

Where business fraud is suspected, we assist with internal investigations ensuring that the investigation process is legally sound. If your business has been defrauded by an external fraudster you will often need to act very fast, if there is any prospect of recovering losses. A significant part of our work is advising clients on all the options and strategies, whether civil law and/or criminal law, with a clear, objective focus on potential outcomes and cost/benefit.

Please get in touch for an initial review on prospects of fraud litigation success. We do provide fee estimates for each stage.

What is civil fraud?

Fraud in the civil law context often overlaps with criminal fraud but there are some key differences. In most civil law claims, fraud occurs where there is a false statement or correct information is withheld or not produced where there is a legal duty to do so. Dishonesty is often a feature of civil fraud but it is not always necesary to prove dishonesty and the legal requirement is instead to demonstrate that there was a lack of actual and honest belief.

The standard of proof in a civil law claim is the balance of probabilities whereas under criminal law it is beyond reasonable doubt.

Working with us to handle your commercial fraud case

We are a specialist litigation and dispute resolution legal firm.

We have the skills to handle civil fraud claims, court injunctions, asset freezing applications, and fraud allegations as part of partnership disputes and shareholder disputes.

Many of our clients select us over the larger firms because they know they will receive a dedicated service which is cost proportionate.

Examples of corporate fraud

There are a myriad of facts that can give rise to criminal and civil fraud claims. Examples include:

• employee fraud
• overstating company profits to induce investment.
• sellers of a company giving false statements to the buyer about finances and/or liabilities.
• false accounting with a view to misleading and defrauding shareholders.
• transferring assets around other Group companies often within an opaque structure.
• identity fraud.
• tax evasion.
• insolvency related fraud.
• insurance fraud

A claim will not always constitute “fraud”. In the employment context fraud would be grounds for dismissal for gross misconduct.

Our experience enables us to tell you whether the potential business fraud claim has prospects of success.

What to do if you suffer business fraud

Often a commercial fraud claim is urgent enough to warrant an interim injunction pending trial. This can grant the claimant some form of relief or protection if for example the defendant is likely to dispose of an asset subject to the underlying commercial fraud claim.

Out of court settlements are common with commercial fraud claims because they are confidential and can include details of compensation.

Commercial fraud claim action routes

Broadly, civil fraud claims fall into the following types :-.

• Deceit – A civil fraud claim based on deceit will usually include a statement or representation which is false or where the person making it has no belief in its accuracy or is reckless as to its truth, intends for the other party to rely on the statement or representation or is of the understanding that the recipent is likely to place such reliance and there has been loss or damage.  As with any court action, but especially fraud, evidence is crucial. A statement may be true when made, but false at a later date. The party giving the statement must inform the party relying on the statement whenever a change of circumstance occurs.
• Conspiracy to defraud – financial fraud claims as a result of conspiracy will include two or more people acting together, with an intention to injure another, unlawful means at the centre of the action and financial damage is caused to the injured party.Strong evidence will be required to claim commercial fraud based on conspiracy.

Fraudulent Misrepresentation

The burden of proof for misrepresentation is lower than that of deceit. Here, the claimant has to show that a negligent statement was made, which the claimant relied on, and in turn suffered loss. The statement can be made recklessly.

Remedies for contract related fraud

If a commercial fraud claim is successful for any ground, then the claimant can ask the Court to:

• Award damages;
• Enforce the commercial understanding;
• If applicable rescind the contract;
• Order the return of assets or property subject to the commercial fraud claim.

A claimant will often embark on an asset tracing exercise in other jurisdictions. We use our network of professionals to assist with this. Forensic accounting may also be required.

Defending fraud allegations and claims

The strategy of defence to a civil court claim where there is a fraud allegation will depend on the facts claimed. However, some common defences are as follows:

• No reliance – the claimant did not in fact rely on any statement or representation. For example, the claimant may have conducted its own investigations often in the form of due diligence. This will likely defeat any tort of deceit claim.
• No loss – the claimant has not suffered any loss or damage. There may be no loss or damage at all, or if there is loss or damage, the defendant did not cause it. It is not uncommon for a defendant to claim that the claimant contributed to the loss or damage suffered.
• No deceit – the statement made was not deceitful. The statement may have been updated at the time of the claimant’s reliance which negates any argument from the claimant that the defendant is liable.

It is the claimant’s burden of proof to satisfy the Court that fraud is present. A strong defence can open a path to settlement if a hole in the claim is properly attacked.