There may be times when a claim against an individual or company will not produce an adequate remedy for a Claimant as the Defendant is not worth suing. However it is possible in certain circumstances to trace a Claimant’s investment and avoid the problem of the Defendant being a “man of straw”. Therefore if for instance, a defendant has purchased a house with a Claimant’s investment money, and is then made bankrupt, it may be the case that the property was held by the defendant on the claimant’s behalf and not as property’s owner.
What is the basis of such a claim?
There needs to be a legally recognised basis, which usually involves establishing that either the defendant or a third party acted dishonestly. Some circumstances in which tracing of assets and investment money can be applied are:
- misrepresentation usually in the case of a company director;
- unlawful interference with goods;
- unjust enrichment usually a restitutionary claim in a case where the defendant or third party has made a profit from the claimant’s money;
- mixing of client’s money;
- dishonest assistance/knowing receipt of money – usually in the case where a director dishonestly assists a company with the loss of client’s money.
What can be done?
Claims can be pursued against the person or company who holds the claimant’s money or property. The remedies which can be sought are freezing injunctions to secure the claimant’s money or property. After the money or property is secured claims for the return of the money can be pursued along with claims for the amendment of the title register with the land registry if the claim involves an interest in property.