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Court of Appeal restores €27m worldwide freezing order


S J Phillips QC
N G Casey
James Goudkamp

Lakatamia Shipping Co Ltd v Morimoto [2019] EWCA Civ 2203

The Court of Appeal has unanimously allowed an appeal by Lakatamia Shipping Co Ltd for which SJ Phillips QC, NG Casey and James Goudkamp appeared. Following a trial in the Commercial Court in 2014, Lakatamia had judgment entered in its favour against Mr Nobu Su, who was formerly a billionaire and one of Asia’s richest businessmen, for approximately US$37m: Lakatamia Shipping Co Ltd v Su [2014] EWHC 3611 (Comm); [2015] 1 Lloyd’s Rep 216. This decision is noted here.

When Mr Su failed to pay any part of the judgment debt, Lakatamia applied for an order restraining him to the jurisdiction with which order Mr Su was served in January 2019 when he arrived at Heathrow. Mr Su then sensationally attempted to flee the jurisdiction by ferry from Liverpool. He was arrested and brought before the Commercial Court. Lakatamia then applied to have Mr Su committed to prison for contempt of court. In addition to relying on Mr Su’s attempt to flee the jurisdiction, Lakatamia contended that Mr Su had dissipated €27m in breach of a freezing order that had been made against him in 2011 (‘the Blair Freezing Order’). In March 2019, Mr Su was committed to prison for 21 months: Lakatamia Shipping Co Ltd v Su [2019] EWHC 1145.

While under cross-examination as to his assets, Mr Su gave evidence that the €27m had been transferred to his mother, Mrs Morimoto, who is resident in Taiwan, and that she knew about the Blair Freezing Order. Lakatamia applied for and was granted ex parte a freezing order against Mrs Morimoto (‘the Burton Freezing Order’) and issued a claim against her (in the tort of unlawful means conspiracy and what is known as the Marex tort, i.e., the tort committed by interfering with rights in a judgment debt (see Marex Financial Ltd v Sevilleja [2017] EWHC 918 (Comm); [2017] 4 WLR 105)).

Following the return date, Lakatamia was granted permission to serve Mrs Morimoto with the claim form out of the jurisdiction. The judge, Sir Michael Burton, held that there was a good arguable case that Mrs Morimoto had unlawfully conspired with Mr Su to dissipate assets in breach of the Blair Freezing Order and that she had by the same conduct intentionally acted to violate Lakatamia’s rights in the judgment debt that Mr Su owed. Despite these findings regarding jurisdiction, Mrs Morimoto succeeded in having the Burton Freezing Order discharged on the basis that there was no real risk that she would unjustifiably dissipate her assets: Lakatamia Shipping Co Ltd v Su [2019] EWHC 898 (Comm).

Lakatamia appealed. It contended the conclusion of the Judge below that there was no real risk of dissipation could not reasonably be explained given his finding that there was a good arguable case against Mrs Morimoto that she was guilty of unlawfully conspiring to dissipate assets in breach of the Blair Freezing Order and acted intentionally to violate its rights in the judgment debt.

On 11 December 2019, the Court of Appeal unanimously upheld the appeal on all five of Lakatamia’s grounds and ordered that the Burton Freezing Order be restored: Lakatamia Shipping Co Ltd v Morimoto [2019] EWCA Civ 2203. The principal reasons were given by Haddon-Cave LJ (McCombe LJ and Sir Stephen Richards concurring) who said at [62]:

"The singular fact that the wrongdoing in this case involves a finding of a good arguable case that the defendant … participated in an actual breach (i.e. a contumacious breach) of an existing freezing injunction powerfully reinforces the inference that that defendant would breach another freezing injunction".

The Court of Appeal’s decision is significant for two principal reasons. First, it confirms that the very nature of the cause of action that the claimant brings can itself demonstrate the existence of a real risk of unjustified dissipation. Second, it corrects a misunderstanding that arguably exists in certain authorities to the effect that a real risk of dissipation needs to be established on the balance of probabilities. The Court of Appeal made it clear that there is no such need and that a real risk is shown by demonstrating that the respondent "may" unjustifiably dissipate assets (see at [34]).

SJ Phillips QC, NG Casey and James Goudkamp (all of 7KBW) were instructed by Hill Dickinson LLP. Mr Phillips and Mr Casey acted for Lakatamia at all stages of the proceedings described above while James Goudkamp joined the Counsel team in January 2019 following Mr Su’s attempt to flee the jurisdiction.

Please view the judgment here, back at the 7KBW website.

Area of Expertise
Civil fraud
Commercial litigation
Injunctions
Jurisdiction / conflict of laws



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