Mullet it over if it seems a bit phishy

14 June 2019

The judgment in World Proteins KFT v Persons Unknown confirms the Court’s willingness to permit restrictive injunctions against “persons unknown” in a fraud claim.

In this case, Metzer QC (sitting as a High Court judge) extended an interim freezing injunction against ‘persons unknown’ to prevent them from accessing money suspected of being obtained through fraud.

‘Phishing’ emails are fraudulent attempts to obtain money or financially sensitive information by pretending to be legitimate entities or companies. They are on the rise, with around 40% of people in the UK having been targeted by increasingly sophisticated attacks.[1] Often, the fraudster will send an email purporting to be a legitimate contact and enclose what appears to be a legitimate invoice.

In World Proteins the method was more sophisticated, and the fraudster posed as a longstanding supplier to the applicant. Genuine emails regarding real invoices passed between the real supplier and the applicant with funds being paid to their genuine bank account. However, shortly after this exchange the applicant received a false email purporting to be a known employee of the supplier, providing new bank details and requesting the payment of genuine outstanding funds to the new bank details. On the basis of this false email, around £2,000,000 was transferred.

World Proteins recovered £1,500,000 of the money transferred but £500,000 sent to a Barclays Bank plc bank account was not recoverable. They applied for an interim freezing account to prevent the fraudsters from removing the money notwithstanding the fact that the identity of the fraudster / account holder was at that stage unknown.  The Court, however, took a pragmatic approach, considering that as the test for injunctive relief was satisfied – namely that the claimant had a good arguable case, there was reason to believe the respondents had assets that should be frozen, there was a real risk of dissipation, and the balance of convenience test was met – that should not preclude the granting of an injunction merely because of an inability to identify the fraudster / account holder.

Following a similar decision in CMOC v Persons Unknown [2017] EWHC 3599 (Comm) it is increasingly clear that English Courts are prepared to grant injunctions against ‘persons unknown’ and this case highlights the court’s increasing propensity to utilise prohibitive measures to tackle the rise in fraud. However it also serves as a cogent reminder that companies need careful safety procedures in place for the transfer of funds.

[1] https://www.actionfraud.police.uk/news/make-sure-you-mullet-over-before-you-fall-victim-to-phishing-emails-on-national-fish-and-chip-day

Leigh Callaway Author
Leigh Callaway
Senior Associate
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Maddy McAra Author
Maddy McAra
Trainee Solicitor
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