In many instances, the moment a person is alerted to the fact that legal proceedings are being instituted against him / her as a result of a misappropriation of funds, alternatively, fraud, they are likely to dispose of their assets / funds or conceal them.  In instances such as these, notice of any proceedings against a debtor would in all likelihood defeat the very object of the proceedings.

The Appellate Division in Knox D’Arcy and Others v Jamieson and Others (1996) (4) SA 348 (A) set out the requirements of launching proceedings on an ex parte basis (without notice to the other party). The court indicated that it needs to be shown that there is a bona fide claim against the debtor and that the debtor is or is likely to dispose of his assets which will render a judgment ineffective. Given that the relief sought is interdictory in nature, the court takes into account the following requirements: (a) the existence of a prima facie right, (b) a well-grounded apprehension of irreparable harm, (c) balance of convenience and the absence of an alternative remedy.

Our team recently dealt with such an application whereby a couple approached our office for assistance after having been defrauded by an individual who misrepresented himself as a financial advisor of a large South African Financial Service Provider.

The documents utilized by the financial advisor appeared to be legitimate documents belonging to the Financial Service Provider, however, after investigation by our office it transpired that the documents were fraudulent, and the funds purportedly invested in the Financial Service Provider’s products were misappropriated by the financial advisor.

Given the significant amount of money that was misappropriated and the risk that the financial advisor would conceal / dispose of his assets, our office launched an urgent ex parte application and successfully obtained an order freezing the advisors bank accounts, the order also made provision for the bank to disclose certain information regarding all accounts held by the advisor. Notice of the application was only required to be given to the advisor after the order was obtained, thereby mitigating the risk of a dissipation of funds.

In the event that bona fide suspicions of fraud and/or misappropriation of funds exist that would result in irreparable harm should the court not urgently intervene, the procedure followed in the case above will provide peace of mind in ensuring that the debtor does not dispose of any assets which could be used in recovering your debt.

Please contact Felicia Christian and Kahla Hemero should you require assistance.