The importance of asset identification for survivors of trafficking and slavery
by Louisa Leeper, FIND
Finding and monitoring the assets of a trafficker can be a powerful step in supporting survivors of trafficking and slavery by:
- Identifying items of value belonging to the trafficker, such as property or company shares. This can help to demonstrate the viability of a UK civil compensation claim by showing that a trafficker has the means with which to satisfy a claim.
- Demonstrating that a trafficker has been moving or hiding assets can support the process to obtain a freezing injunction.
- Recovering assets during the enforcement stage which can enable survivors to secure compensation.
While asset tracing is typically the work of financial investigators, legal advisors can play an instrumental role in laying the groundwork, as well as doing some of the investigative work themselves. With a little bit of guidance, a good internet connection and a sensible approach to using social media, they can start to build a picture of a trafficker’s lifestyle, business interests and network of associates. Moreover, hunting for assets in the UK is easier than in other countries because the public record is rich with freely available pots of information on real estate, companies and other types of assets.
Finding and recovering assets can be a long and involved process, however it does bring results. Its value can be seen most recently in a case brought by ATLEU, 7BR and Simmons & Simmons LLP in 2021. The legal team represented two Hungarian survivors of trafficking who were forced to work at a factory in Yorkshire for well below the minimum wage. The survivors were housed in appalling conditions and were regularly harassed and threatened.
FIND investigated the trafficker and his main company, and found that while its assets were diminishing, he had established a new group of companies from which he was continuing to operate his business. By demonstrating this dissipation of assets, the legal team were able to secure a freezing injunction worth up to £500,000.
Following the injunction, the survivors negotiated a favourable settlement including up-front payments of cash which the trafficker previously maintained he did not have. It also included security for the survivors’ costs as charging orders on properties owned by companies associated with the trafficker.
Join our free sessions on 22 and 29 November to find out more about tracking down traffickers’ assets to ensure that your client receives the justice they deserve.
Making an effective referral for compensation
There is no universal pot of money where victims of trafficking can automatically claim compensation. Whether your client can make a claim and who is best placed to help them with that claim starts with being able answer the following questions:
- What does your client want to be compensated for?
- Who does your client want to claim the compensation from?
Include information that addresses these questions when making a referral or seeking advice.
Victims of trafficking may be able to make a claim for compensation from the following sources.
1. A public authority
There is potential for a broad range of claims against authorities such as the police, Home Office, local authority, etc., for example:
- Being re-trafficked or left in a vulnerable situation following a failure by the police to take action on the report of a crime
- A decision to prosecute in circumstances where the Crown Prosecution Service prosecuting guidance has not been properly applied (this may include a claim for false imprisonment if time was spent in prison)
- Breaches of statutory duties such as where a local authority fails to provide the correct support to a young person or failings with provision under the Modern Slavery Victim Care Contract after a positive Reasonable Grounds decision is made
- Failing to follow policies on entry clearance that result in the individual being exploited.
To get compensation, there usually needs to be a breach of human rights under the ECHR or a loss or injury that has been caused by a public body.
It is possible to secure legal aid for such claims (subject to means and merits tests) and, because the claims are against a public body, there are fewer issues with locating a defendant, recovering legal costs and enforcing judgment.
2. Their trafficker
It is possible to seek damages directly from the trafficker for any assaults, abuse and injuries that they have caused. Claims can also be pursued for breach contract, the recovery of unpaid wages, poor working conditions and discriminatory treatment.
With these types of claims it is important at the outset to establish that the trafficker can be located and that they have sufficient assets so that a judgment can be enforced.
3. Criminal Injuries Compensation Authority (CICA)
Victims that have suffered injuries consequent to a criminal act by another may be able to claim damages for their injuries from the government funded CICA.
There is no automatic right to legal aid to pursue such claims but we offer advice to support workers helping survivors with such claims via our second tier advice line: firstname.lastname@example.org. Exceptional case funding can be applied for to appeal to the tribunal where an award is refused.
Find out more
Find more information about the different types of compensation claims.
Where a trafficker is convicted, it may be possible to recover compensation within the criminal proceedings.
Our next series of training events starts in September. To learn more about compensation and other remedies that may be available join us for:
- VRR, Police Complaints and Damages claim against public authorities, 7 September
- How to obtain an award from the Criminal Injuries Compensation Scheme for survivors of trafficking, 15 November
Impact of CICA awards on benefits
Your client has been awarded compensation by the Criminal Injuries Compensation Authority (CICA). However, they are also in receipt of welfare benefits. The transfer of a lump sum from CICA will usually mean a significant change in the client’s financial situation. How will this affect any means-tested benefits?
This is understandably a very real concern for trafficking survivors in receipt of benefits. If a CICA award leads to a reduction or loss of income, even temporarily, it would reduce the positive impact of any compensation award.
When an individual on benefits receives an award for personal injury, it will be disregarded for the first 52 weeks following receipt¹. After this time, the amount may be considered as capital for the purposes of a means test. This could mean that the individual is no longer eligible for the benefits they were receiving.
Personal injury trust
Where the award of compensation is for personal injury, then a Personal Injury trust (PI trust) can be set up. This is a specially designated bank account in which the money is held for the benefit of the client. Money held in the account is ignored for the purposes of welfare benefits means testing. This applies regardless of the amount of compensation awarded. However, the award must be transferred to the trust account within 52 weeks of the date that the award was received.
Once the award is held in a PI trust, it may generate income, such as interest payments. It is important to note that the DWP will treat income from a PI trust differently depending on what type of means-tested benefit the individual is receiving. The following benefits are means-tested:
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
- Income Support
- Pension Credit
- Tax Credits (Child Tax Credit and Working Tax Credit)
- Housing Benefit
- Council Tax Support
- Social Fund (Sure Start Maternity Grant, Funeral Payment, Cold Weather Payment)
- Universal Credit (UC).
Most people will now be receiving UC, which replaced many of the older types of benefit. However, some may still be in receipt of the other means-tested benefits listed above. If the individual is in receipt of UC, income from the PI trust will be disregarded when calculating their capital and unearned income². This means that the individual does not need to worry about income from the trust causing them to become ineligible for UC.
However, the situation is different for those in receipt of a means-tested benefit other than UC (see above list). Income derived from the trust is not to be treated as disregarded capital when calculating an applicant’s means³. This means that the trust income can be considered by the DWP. If it has taken the individual over a maximum allowance, they may no longer be eligible for the benefit they were receiving. It is very important for recipients of older means-tested benefits to be aware of this.
State recovery of benefits
We also enquired about the possibility of the Secretary of State recovering benefits from a survivor in receipt of a CICA award. If an individual has to stop working due to personal injury and begins to receive benefits as a result, it is sometimes possible for the Secretary of State to recover an amount from compensation awarded due to that injury. This is done via the Compensation Recovery Unit.4
However, awards from CICA are protected from this by the Social Security (Recovery of Benefits) Regulations 1997 under regulation 2(2)(d).5
This regulation states that a CICA award is to be considered a prescribed payment. This means that the Secretary of State is unable to recover payments on the basis of the client receiving an award from CICA.
This is good news for survivors of trafficking in receipt of benefits. A compensation award from CICA can be a life changing amount of money. It may help the survivor to escape financial vulnerability and the possibility of further exploitation. The importance of compensation is reflected in Article 15 of the Convention on Action against Trafficking in Human Beings. Survivors should be able to fully enjoy the benefits of compensation without suffering financial loss as a result.
Many thanks to Child Poverty Action Group for their help with our research.
1 Schedule 10 Capital to be Disregarded Regulation 46(2)(12A) of The Income Support (General) Regulations 1987 see also Regulation 75 of The Universal Credit Regulations 2013
2 Regulation 75(4) of The Universal Credit Regulations 2013
3 Schedule 10 (12A)(d) Income Support (General) Regulations 1987
5 Exempted trusts and payments
(2) The following payments are prescribed for the purposes of paragraph 8 of Schedule 1:
(d) any award of compensation made to or in respect of the injured person under the Criminal Injuries Compensation Act 1995 F9 or by the Criminal Injuries Compensation Board under the Criminal Injuries Compensation Scheme 1990 or any earlier scheme;
The Queen (oao) Norbert Novodomski v The Lord Chancellor and Secretary of State for Justice CO/9/2020
Amendment to the Lord Chancellor’s Guidance
Under s32(2) of the Legal Aid Sentencing and Punishment of Offenders Act 2012, victims of trafficking are entitled to legal aid to pursue a trafficking or modern slavery compensation claim. In practice legal aid would regularly be refused because the victim had not first attempted to find a solicitor on a no win no fee basis (conditional fee agreement) or made enquiries with insurers about ‘after the event’ legal insurance, to cover the costs of bringing a claim.
ATLEU issued a judicial review on behalf of a survivor who had been trafficked for the purpose of labour exploitation and had suffered mental injury as a result of his treatment.
ATLEU argued that trafficking and modern slavery compensation claims are not suitable for no win, no fee agreements. Such agreements extend only to the solicitors’ profit costs; they do not cover the associated legal fees (disbursements). Many victims of trafficking require the help of an interpreter in order to give instructions about their treatment. It is often necessary to obtain expert reports regarding the extent of injury, or trafficking status and there are, of course, court fees. These costs would need to be covered by the survivor as they fell due. For a survivor with such limited financial resources that they are eligible for legal aid, paying legal fees is simply not possible.
ATLEU carried out research into the availability of after the event insurance and was unable to find any insurer who would both provide this insurance and pay associated legal costs as they fell due.
ATLEU were able to provide evidence that the requirement to provide evidence of a search for a no win, no fee agreement and after the event insurance was simply resulting in significant delays to survivors receiving the advice they needed to pursue compensation. Further, it was resulting in legal aid practitioners concluding that they could only act for a small number of survivors because of the additional work needed to obtain legal aid.
No evidence was given on behalf of the Lord Chancellor that there was any genuine prospect of a victim of trafficking, with limited or no financial resources, obtaining a no win, no fee agreement or after the event insurance.
On review of the evidence provided by ATLEU the Lord Chancellor agreed to amend guidance to decision makers and the judicial review has been settled.
It is now expressly stated at para 7.19 of the Lord Chancellor’s Guidance that trafficking and modern slavery compensation claims should not be considered suitable for a no win, no fee agreement and so there is no longer a requirement to provide evidence of after the event insurance enquiries.
Human trafficking survivors settle claims after successful freezing injunction application
by James Robottom and Rose Harvey-Sullivan, 7 Bedford Row
ATLEU has recently settled High Court claims on behalf of two survivors of trafficking following a successful application for a freezing injunction over the defendant and third-party companies’ assets. The case demonstrates how freezing injunctions can be used to secure compensation for victims where defendants are likely to or have dissipated their assets to avoid liability.
The claimants, Mr Magyar and Mr Toth, both Hungarian nationals, were victims of a large scale conspiracy to traffic human beings from Hungary to the UK for the purposes of forced labour in 2011 – 2013. The majority of victims of that conspiracy were forced to work in a mattress factory called Kozeesleep – see AK v Hick Lane Bedding  EWHC 3288 (QB). However, both claimants were put to work in smaller businesses including metalpowdercoating.co.uk (MPC), a business in Batley, West Yorkshire.
They were forced by their traffickers to work at the factory for little pay, housed in appalling conditions, harassed and threatened. They alleged that staff and management at the factory were aware of their situation and paid their traffickers directly in order to profit from cheap labour. In 2014 the Hungarian traffickers were convicted of human trafficking offences, and in 2016 the managing director of the mattress company was also convicted of conspiracy to traffic human beings.
The claimants brought High Court claims for psychiatric injury, breach of contract, and intentional torts including harassment and unlawful means conspiracy against the Defendant, metalpowdercoating.co.uk. When proceedings were issued in 2018, MPC was a solvent company with substantial assets. However, it later became clear from Companies House documents that the company’s assets were diminishing. By 2020, MPC was balance sheet insolvent. Following investigations and pro bono assistance from Simmons & Simmons LLP, ATLEU was able to demonstrate that, following issue of the claims, the directors of MPC had set up other companies which operated from the same premises as MPC which carried out the same work. MPC had sold property to these companies, several of which now had substantial assets, while MPC had none. The other companies, however, were not parties to the claim.
At the same time it became apparent that the sole Managing Director of MPC, Mohamedali Foolat, had been prosecuted by the CPS for human trafficking offences in relation the claimants in 2015, but the matter had been dropped on a legal technicality. Further, just 12 days after service of proceedings on MPC in 2018, he had transferred ownership of his private home to family members.
With a trial in the first claim only six weeks away, the claimants applied ex parte for a freezing injunction and to add Foolat as a defendant. To obtain a freezing order the applicants had to establish:
- A good arguable case
- The existence of assets belonging to the Respondent
- A real risk that the respondent will dissipate his assets if the order is not given
- That the order is just and convenient.
The freezing injunction
At an urgent without notice hearing on 5 March 2021, Mr Justice Johnson granted a freezing order up to a value of £500,000 against MPC, Foolat personally, and all other companies managed by Foolat (seven respondents in total). There were several features of the application which will be of particular note to practitioners:
- It was made close to trial
- The application was brought by legally aided claimants
- The court accepted that it was appropriate to make the order against the non-defendant companies. Although the claimants’ causes of action were against MPC, only the injunction was granted ancillary to and in support of that claim. A freezing injunction may be made against a third party where the relevant assets may be reached by one legal route or another for the purposes of satisfying judgment. In Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 the High Court of Australia held that in order for a freezing injunction against a non-party, against whom there is no cause of action to be granted, it was not necessary to show that the non-party held assets to which the defendant was entitled. The High Court held [405-406] that such an order may be appropriate where:
(i) the third party holds, is using, or has exercised or is exercising a power of disposition over, or is otherwise in possession of, assets, including ‘claims and expectancies’, of the judgment debtor or potential judgment debtor; or
(ii) some process, ultimately enforceable by the courts, is or may be available to the judgment creditor as a consequence of a judgment against the actual or potential judgment debtor, pursuant to which, whether by appointment of a liquidator, trustee in bankruptcy, receiver or otherwise, the third party may be obliged to disgorge property or otherwise contribute to the funds or property of the judgment debtor to help satisfy the judgment against the judgment debtor.
The claimants argued that Foolat and the other companies were likely to be judgment debtors in due course. Where assets have been moved out of a company for the purposes of avoiding having to pay creditors, those assets can be pursued for the purposes of satisfying the judgment. Further, section 423 of the Insolvency Act allows the court to set aside a transaction entered into at an undervalue (for instance, selling a property to your own company at a price below market value) in order to defraud a person making a claim against him or her.
Indeed, if the third-party companies or their directors had been found to have conducted themselves in this way, they could have committed the criminal offence of Fraudulent Trading under s993 Companies Act 2006. That offence is made out where any business or company is carried on with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose.
- Unusually, the Court did not require the applicants to give an undertaking in damages. The applicants successfully argued that the court has a discretion not to require the standard undertaking and as impecunious trafficking victims, they should not be prevented from the benefit of a freezing injunction by reason of their inability to pay damages. See Gould v Kay  7 W.L.U.K. 22 and Allen v Jambo  1 W.L.R. 1252, where Lord Denning MR stated:
“I do not see why a poor plaintiff should be denied a Mareva injunction just because he is poor, whereas a rich plaintiff would get it.”
After the freezing injunction was granted, but prior to the hearing of the claimants’ application to add Foolat as a defendant, the claimants were able to negotiate a favourable settlement with the defendant. That included up-front cash payments of money which the defendant had previously maintained it did not have and did not have access to. It also included security for the claimants’ costs in the form of charging orders on properties owned by the third-party companies.
The Explanatory Report to the Council of European Convention on Action against Trafficking Human Beings states in relation to Article 15, the right to compensation and legal redress, that:
Even though it is the trafficker who is liable to compensate the victim, by order of a civil court or –in some countries –a criminal court, or under a judicial or extrajudicial transaction between the victim and the trafficker, in practice there is rarely full compensation whether because the trafficker has not been found, has disappeared or has declared himself bankrupt. [§197]
These cases demonstrate the potential for using freezing injunctions and applying the powers of the High Court to secure compensation for survivors where defendants and traffickers have dissipated assets in order to avoid paying compensation. They are a powerful tool in the armoury of lawyers seeking redress and vindication for victims.
ATLEU instructed James Robottom and Rose Harvey-Sullivan from 7 Bedford Row in this case.
Diplomatic immunity for trafficking claims quashed
by Nusrat Uddin, Wilson Solicitors LLP
An exploited domestic servant, JW, brought a claim against her Saudi diplomat employer. She worked for over 16 hours a day, for months, without any breaks or days off, and was unable to leave the diplomat’s residence. Her promised wages were also withheld.
The diplomat asserted that his diplomatic status protected him from any civil claims and asked the court to strike out the claim. The Employment Tribunal held that the current Saudi diplomat is not immune from the civil jurisdiction in relation to claims of human trafficking and modern slavery.
The judge interpreted an exception to diplomatic immunity in a way that it applied to the trafficking and employment of a domestic servant in conditions of modern slavery. Observing that ‘it would be difficult for a court to forsake what it perceived as a legally respectable solution’, so the judge refused to strike out the case.
The judgment is groundbreaking because it holds that a current diplomat is not immune in relation to claims of human trafficking and modern slavery. In October 2017, the UK Supreme Court in Reyes v Al-Malki had held that a former diplomat was not immune in those circumstances, but whether a current diplomat still enjoyed immunity was unclear. This judgement transforms the dicta of the Supreme Court into a ratio that can be applied in other cases, advancing the commitment of the international community, and the UK in particular, to end modern slavery.
The diplomat has indicated that he will be appealing the decision and so it is likely that the case may again be appealed as far as the Supreme Court, just as the Reyes v Al-Malki case was. However, we are extremely pleased with the judgement at this stage which has far reaching implications for victims of trafficking and modern slavery who are ill-treated by their diplomat employers. These claims ensure that victims are able to assert their rights in the face of such exploitation. We hope that this judgement acts as a deterrent against abuse from such employers going forward.
JW instructed Wilsons Solicitors LLP and was represented by Philippa Webb of Twenty Essex Chambers.
More information can be found on the Wilsons LLP website.
Nusrat Uddin is a solicitor in the Public Law team at Wilson Solicitors LLP. She works with vulnerable and disadvantaged clients who have been failed by state authorities with a particular focus on improving state support for victims of trafficking and modern slavery.
Increase in compensation in discrimination claims
Discrimination claims are a vital part of compensation for victims of modern slavery and human trafficking. Victims have gained substantial compensation from their traffickers by way of discrimination claims in the Employment Tribunal. Injury to feelings is one of the most important components of these discrimination claims.
Since the 2002 case of Vento v Chief Constable of West Yorkshire Police  IRLR 102 compensation for injury for feelings has been divided into three ‘bands’:
- The lower band applies to ‘less serious cases where the act of discrimination is an isolated or one off occurrence’
- The middle band ‘should be used for serious cases which do not merit an award in the highest band’
- The top band is appropriate for ‘the most serious cases such as where there has been a lengthy campaign of discriminatory harassment’.
Only in ‘the most exceptional cases’ will awards be higher than the top band.
The guidelines have now been increased for all claims presented to the tribunal after 6 April 2019. The new bands are:
- Lower band £900 to £8,800
- Middle band £8,800 to £26,300
- Upper band £26,300 to £44,000.
These guidelines are found in the Presidential Guidance, 25 March 2019.
It is worth bearing in mind that although Vento refers to the seriousness of the conduct to determine the correct band, it is the effect on the individual and not the seriousness of the treatment which determines the level of compensation. Nevertheless, it will be considerably easier to establish the seriousness of the impact of the individual in cases of serious conduct – and vice versa.
If a victim has suffered from injury to their health, they can also recover compensation for personal injury in the tribunal in addition to compensation for injury to feelings. In contrast to the Vento bands, compensation for personal injury is usually calculated according to the 14th Edition of the Judicial College Guidelines for Psychiatric Damage.
Compensation for injury to feelings and personal injury is also now subject to a 10% uplift following Simmons v Castle  1ALL ER 334. There is no cap on discrimination damages.
This new increase underlines the effectiveness of discrimination complaints in compensating victims. Victims may also be entitled to compensation for aggravated damages, exemplary damages and interest.
When a failure to pay the National Minimum Wage over more than two years can be established as an act of discrimination, then damages for failure to pay the National Minimum Wage may be recovered for more than the two-year current limitation imposed by the Deductions from Wages (Limitation) Regulations 2014. See for instance Ale v Chugani and others.
Au pairs and the barriers to fair pay by Rosie Cox
Recent research on au pairs in the UK has found that during the last 10 years, au pairing has changed dramatically. There is no longer a clear divide between the work done by au pairs and work that qualified nannies and full-time professional housekeepers would have done in the past. Au pairs are now open to exploitation by working long hours for low pay because government guidance is so scant and vague.
In 2008, the UK au pair visa was ended and with it went government regulation of au pairing. Current government guidance allows for people in vastly different situations to be classified as au pairs. In the UK, an au pair can work any number of hours per week, be involved in any kind of activity and does not even need to live in their ‘host’s’ home. In fact, the only thing that the guidance is definitive about is that au pairs are not workers and they are not entitled to NMW and paid holidays.
Analysis of 1000 advertisements for au pairs posted on Gumtree.com revealed that au pairs were being offered posts that not only included full-time, demanding work within hosts’ homes, but that some ‘hosts’ also wanted ‘au pairs’ to work in their businesses and shops.
Despite many au pair roles being indistinguishable from domestic ‘work’, au pairs who might want to claim NMW face two barriers. The first is proving that they are workers employers found that “unless you state that you are hitting them [live-in domestic workers], the helpline is unlikely to tell you that you need to pay them minimum rather than au pairs, something that the vague and capacious guidance on au pairing makes very difficult. Second, if they live-in, they are then likely to be subject to the ‘family worker’ exemption from NMW. This rule has been written in such a way that researchers who called the government’s pay and work rights helpline posing as wage,”*.
A clear definition of au pairing is urgently needed in the UK. This should create a limited, part-time role for au pairs who are primarily engaged in language learning and cultural exchange and a separate role for domestic workers, unhindered by reference to family membership. Both should be rewarded with fair pay and conditions.
For more on the situation of au pairs in contemporary Britain, see As An Equal: Au Pairing in the Twenty-First Century by Rosie Cox and Nicky Busch.
Rosie Cox is Professor of Geography at Birkbeck, University of London. She has been researching paid domestic work and au pairing in the UK for over 20 years.
*Moss, Jenny. (2015). Migrant domestic workers, the National Minimum Wage and ‘family worker’ concept. In Cox, R (Ed) Au Pairs’ Lives in Global Context: Sisters or Servants. Palgrave pp70-83
Extending time for minimum wage claims by Anna Beale
In 2015, a two year limit was placed on claims for unauthorised deductions from wages in the employment tribunal. As many victims of trafficking are paid nothing, or almost nothing, over many years, recovery of (at best) two years’ back pay will not fully reflect their loss. As an alternative, a claim can be brought in the civil courts for breach of the implied contractual term requiring payment of the minimum wage. A six year limitation period applies to such claims but of course many wage claims by victims of trafficking extend back still further.
Section 32(1)(b) of the Limitation Act 1980 provides a possible means of extending this six year limit. Where the Defendant has deliberately concealed from the Claimant any fact relevant to her right of action, the six years will not begin until the claimant has discovered that fact, or could reasonably have discovered it. Under section 32(2), such deliberate concealment is expressly stated to include a situation where a Defendant deliberately commits a breach of duty in circumstances where it is unlikely to be discovered for some time.
These provisions were successfully deployed in the recent case of A*  EWHC 3098. A was a domestic worker for the Defendants for almost 10 years. As in many trafficking cases, when A was brought to the UK she and was unable to read or write in English. The Defendants made A sign documents that they sent annually to the Home Office, which stated that she was paid for her work in line with the national minimum wage.
The Court found that the Defendants had deliberately withheld from A the fact that they were representing to the Home Office that they were complying with UK employment laws, when they were not. The Court also found that the Defendants knew they were obliged to pay A the national minimum wage, and therefore that they fell within the provisions of section 32(1)(b) and (2). Time only started to run when A had learned enough English to read the documents she was signing, and so her whole claim was in time.
These circumstances may apply in many trafficking cases where there is a long period of employment. The availability of this extension should always be a factor in considering the best forum for such claims.
By Anna Beale
*The case is anonymised in accordance with a court order pending determination of the Defendants’ application for a permanent anonymity order.