Fraud: concurrent civil and criminal proceedings

Victims of fraud often have to make the decision of whether to bring civil proceedings or criminal proceedings against the perpetrator of the fraud at a very early stage. This can be a very stressful time for victims of fraud. To pursue both civil and criminal proceedings may seem like the easiest decision to make. Whilst both civil and criminal proceedings can be pursued and indeed can run in parallel with each other there are a number of factors that need to be taken into account when considering this course of action. For more information on civil and criminal proceedings please see our article on the advantages and disadvantages of civil and criminal proceedings.

Privilege against self-incrimination

A defendant in civil proceedings can sometimes rely on privilege against self-incrimination to avoid answering questions or providing documents that have the potential to incriminate them in criminal proceedings. There are however exceptions where a defendant will not be able to rely on privilege against self-incrimination.

Under the Fraud Act 2006 a person cannot rely on privilege against self-incrimination to avoid answering questions related to property or complying with orders made in relation to property on the ground that by doing so they may incriminate themself or their spouse or civil partner of an offence under the Fraud Act 2006 or a related offence. Property is defined as money or other property whether real or personal. A related offence means conspiracy to defraud or any other offence involving any form of fraud of fraudulent conduct or purpose.

However, a statement or admission made in answering a question in relation to property or complying with an order relating to property cannot then be used in evidence against that person or their spouse or civil partner in proceedings for an offence under the Fraud Act 2006 or a related offence. This means that whilst there is no privilege against self-incrimination in civil fraud proceedings (in relation to property) that statements or admissions gained as a result of this statutory exception (in relation to property) will not be admissible in criminal proceedings.

Another statutory exception is that there is no prejudice against self-incrimination under the Theft Act 1968. Under the Theft Act 1968 a person cannot rely on prejudice against self-incrimination to avoid answering questions on the recovery or administration of any property, for the execution of any trust for an account of any property or dealings with property on the ground that they may incriminate themself or their spouse or civil partner. The prejudice also cannot be relied on to avoid complying with orders made in any such proceedings on the ground that the person may incriminate themself or their spouse or civil partner.

However, a statement or admission made in answering such a question or complying with such an order cannot then be used as evidence in proceedings against that person or their spouse or civil partner for an offence under the Theft Act 1968.

FM Conway Limited v Peter Suggett & Ors [2018] EWHC 3173 (QB)

In FM Conway Limited v Peter Suggett & Ors, the defendant submitted an application to have the civil fraud proceedings stayed on the basis that that there was a criminal investigation arising out of the same facts. Butcher J rejected the application and did not order a stay. In arriving at this decision the principles summarised in Akcine Bendrove Bankas Snoras v Antanov [2018] EWHC 887 (Comm) were followed. A stay of civil proceedings will not be granted just because there are criminal proceedings arising out of the same facts.

Use of evidence of convictions

If a defendant has already been convicted of a criminal offence this may be admissible in civil proceedings to prove that the defendant committed the civil offence (section 11 Civil Evidence Act 1968).

Use of documents from criminal proceedings in civil proceedings

In deciding whether material derived from criminal proceedings can be used in civil proceedings, the Court will consider, among other factors, whether or not the criminal proceedings are still ongoing, how closely the civil proceedings are related to the criminal proceedings and whether the people who initially provided the information to the authorities will be protected if the information is disclosed. If the documents sought to be used contain correspondence between a domestic prosecuting authority and a foreign authority there is also the consideration of the need to keep this correspondence confidential.

Ultimately, the decision will be made by balancing the public interests of the administration of justice in criminal proceedings and protecting those who provided the information to the authorities.

One of the most important principles to note here is that material derived from criminal proceedings will not usually be available to be disclosed in civil proceedings until after the criminal proceedings have come to an end (Lord Reid in Conway v Rimmer [1968] AC 910).

Whilst there are some general principles, an example of which is given above, whether evidence derived from criminal proceedings can be used in civil proceedings will very much depend on the facts of the case.

Our Dispute Resolution Team have a wide range of experience dealing with fraud cases and can provide further advice on civil fraud and the interaction between civil and criminal proceedings.