Victims of fraud sometimes erroneously think that if money is stolen from them and gets transferred around the world enough times, and sent to companies in far flung places, that they will never recover their losses.
A community of world class Courts have been co-operating to debunk this myth, with the BVI Court at its epicentre. Asset tracing is achieved through a mix of aggressive worldwide freezing injunctions, intrusive disclosure orders and the most glorious legal fiction against monies held by thieves: a trust. Add the “money box” jurisdiction to the mix and every thief in the chain is culpable and all of the assets are traceable.
In Westdeutsche Landesbank Girozentrale v Islington London Borough Council  AC 669 at 716, Lord Browne-Wilkinson observed: “Although it is difficult to find clear authority for the proposition, when property is obtained by fraud, equity imposes a constructive trust on the fraudulent recipient: the property is recoverable and traceable in equity.”
In Arthur v The Attorney General of the Turks & Caicos Islands  UKPC 30 it was held that a defendant incurs an equitable liability for “knowing receipt” when he or she acts unconscionably by receiving and retaining trust property with the knowledge that it was transferred in breach of trust. Liability for knowing receipt can also be incurred when property is transferred in breach of a fiduciary duty other than a breach of trust. An obvious example would be the transfer of a company’s property in breach of the directors’ fiduciary duties, because a director is not a trustee of the company’s assets. That is the basis of the claim in the present case since it is not alleged that the Property was held by or for the Crown on trust, but rather that the Minister acted in breach of fiduciary duty to the Crown in authorising the transfer to the appellant.
If a victim wishes to freeze company assets of a non-defendant, he must either:
(a) be prepared to make a sufficient case that the company concerned is just the “money-box” of the defendant and holds assets to which the defendant is beneficially entitled; and/or
(b) it has to make that company a defendant itself under the Chabra jurisdiction.
In TSB Private Bank International SA v Chabra  1 WLR 231 the Court held that it had jurisdiction to grant freezing orders against not only defendants to a cause of action, but also third party companies where there is good reason to suppose that their assets may in truth be the assets of the defendant against whom the cause of action is asserted.
The Court of Appeal decision in Lakatamia Shipping Company Limited  EWCA Civ 636 held that the Court must adopt a pragmatic approach where there is reason to believe that the assets of a company may ultimately be required to be made available for the purposes of enforcement against its controller (para 35).