FM Capital Partners Ltd v Marino & Ors

A standard worldwide freezing order does not ordinarily freeze assets legally and beneficially owned by a company merely because the respondent controls it as shareholder or director. The extended definition may capture assets not legally or beneficially owned by the respondent where he has power to deal with them as if they were his own, but control exercised as an organ or agent of a company is insufficient. A freezing order may nevertheless require notice of dealings with company assets where those dealings may diminish the value of the respondent’s shareholding. The High Court may recognise that a Court of Appeal decision has been impliedly overruled by a later inconsistent Supreme Court decision. Such an extension of a freezing order to company assets is exceptional. Further disclosure may be ordered where necessary to police the order and investigate possible dissipation.

The claimant had obtained judgment against the third defendant, Mr Ohmura, for dishonest assistance in breaches of fiduciary duty and bribery. A worldwide freezing order was continued after the court found a real risk of dissipation. Mr Ohmura sought variations removing references to assets of companies in which he had direct or indirect interests, trust or nominee assets, and specified property. The claimant sought tighter notification requirements and further disclosure concerning Mr Ohmura’s and certain companies’ assets.

The central issues were the proper construction of the extended definition of assets in the freezing order, the effect of the Supreme Court’s decision in JSC BTA Bank v Ablyazov on Lakatamia Shipping Co Ltd v Su, and whether further disclosure was justified.

1. Construction of the extended definition. The extended definition in the standard form freezing order can capture assets which the respondent does not legally or beneficially own but over which he has power to dispose of or deal with as if they were his own. However, a director or shareholder exercising a company’s dispositive powers acts as an organ or agent of the company. The mere fact of ownership, directorship or practical control does not make the company’s assets the respondent’s assets.
2. Effect of the authorities. The principles in Group Seven Ltd v Allied Investment Corpn Ltd and Lakatamia Shipping Co Ltd v Su remained applicable insofar as they concerned separate corporate personality, agency and the effect of transactions on the value of a respondent’s shareholding. To the extent that Lakatamia Shipping Co Ltd v Su held that the extended definition could not include assets controlled by the respondent but not legally or beneficially owned by him, that part of its ratio could not stand after JSC BTA Bank v Ablyazov.
3. High Court’s power. There was no rule preventing a High Court judge from deciding that a Court of Appeal decision had been impliedly overruled by a later Supreme Court decision. The High Court was bound to apply the later Supreme Court decision where the inconsistency was clear.
4. Variation. The companies’ assets were removed from the freezing order. There was no evidence that Conquest or Squadra were merely the respondent’s pockets or wallets, that their assets belonged beneficially to him, or that StileF was controlled by him. The Commercial Court words concerning trust or nominee assets were also removed for want of evidential justification. The reference to the Swiss property was omitted.
5. Notification and disclosure. Although company assets were not themselves frozen, notice of transactions exceeding £10,000 was justified because dealings could diminish the value of Mr Ohmura’s shareholdings. Further disclosure concerning transfers, turnover, profits, bank statements and accounts of Mr Ohmura, Conquest and Squadra was justified by the real risk of dissipation, discrepancies in disclosed assets and prior non-compliance. Disclosure concerning StileF was refused because Mr Ohmura lacked majority ownership and day-to-day control.
6. The order was varied accordingly. The remaining variation applications were dismissed, and the precise terms of the revised order and certain further disclosure categories were left for further submissions.

First-instance decision. The judgment records the earlier continuation of the freezing order and refers to the judgment entered against Mr Ohmura, but no appellate history of the present applications is stated.