The Civil Fraud Claim Structure
Employee fraud civil claims typically allege dishonest misappropriation of the employer's property, seeking restitution, account of profits, and equitable tracing remedies. The claimant must establish dishonesty (objectively assessed under Ivey v Genting Casinos [2017]), causation, and quantum.
Forensic accountants support each element: investigation establishes the dishonest conduct and mechanism; asset tracing establishes causation between the fraud and identifiable assets; loss quantification establishes quantum.
Freezing Injunctions
Freezing injunction applications are typically made without notice when there is real risk of asset dissipation. The court requires credible evidence of a good arguable case and a real risk of dissipation. Forensic accountants provide preliminary quantum assessment and asset tracing within 24–48 hours.
The supporting affidavit should include: summary of the fraud mechanism; preliminary quantum; identified assets and their location; and evidence of dissipation risk (e.g. recent large transfers, property sales, or suspect's knowledge of the investigation).
Norwich Pharmacal Orders
Where the employer knows funds were misappropriated but cannot identify the recipient accounts, a Norwich Pharmacal order requires banks or other third parties to disclose information identifying wrongdoers. Forensic accountants analyse the disclosed information and trace funds through subsequent transfers.
Norwich Pharmacal applications are often combined with freezing injunction applications in the initial without-notice hearing.
Asset Tracing Methodology
Asset tracing follows misappropriated funds from source through intermediate accounts to current asset location. The forensic accountant produces a tracing schedule showing each transaction, the account involved, and the current status of funds.
Tracing becomes complex where funds have been mixed with legitimate income (the lowest intermediate balance rule may apply) or converted into property. Expert evidence must address these complexities clearly for the court.
The Expert Witness Report
The CPR Part 35 expert report should clearly explain: the fraud mechanism; the investigation methodology; the findings with supporting schedules; the loss quantification; and the asset tracing conclusions. The report must comply with PD 35 and address the Ikarian Reefer duties of independence and objectivity.
Expert reports in fraud cases are heavily scrutinised at trial. Clear methodology, transparent workings, and acknowledgment of limitations strengthen credibility under cross-examination.