Lakatamia Shipping Company Ltd v Morimoto

A good arguable case that a respondent committed wrongdoing relevant to dissipation points powerfully towards a real risk of dissipation. Significant further evidence may be unnecessary, but the inference depends on the particular facts and evidence. Dishonesty alone does not automatically establish the risk.

The applicant must establish an objectively assessed danger of unjustified dissipation by solid evidence, rather than prove that dissipation is more likely than not. Relevant evidence must be considered cumulatively and separately against each respondent. Arguable participation in the dissipation of another person's assets in breach of an existing freezing order can strongly support an inference that the respondent would dissipate their own assets to frustrate enforcement. Appellate intervention is justified where the judge overlooks that central argument and reaches a plainly wrong conclusion.

Lakatamia Shipping Company Ltd held substantial unsatisfied judgments against Mr Nobu Su, who was subject to a worldwide freezing order. During committal proceedings, Mr Su gave evidence that his mother, Toshiko Morimoto, known as Madam Su, had received the proceeds of sales of his Monaco villas and knew about the freezing order. Lakatamia brought claims against her alleging unlawful means conspiracy and intentional assistance in frustrating its judgment rights. It obtained a further worldwide freezing order against her and two companies involved in holding the villas.

On the return date, Sir Michael Burton found a serious issue to be tried and a good arguable case against Madam Su. He permitted service out of the jurisdiction but discharged the freezing order against her because he considered the evidence insufficient to establish a real risk of dissipation: [2019] EWHC 1145 (CH). Lakatamia appealed, relying on her alleged participation in the earlier dissipation and evidence concerning offshore companies, international transfers and liquid assets. Madam Su's respondent's notice challenged the finding of a good arguable case. The central issue was whether the judge had properly assessed the risk of dissipation.

1. The appeal was allowed unanimously. The worldwide freezing order against Madam Su was restored. Haddon-Cave LJ delivered the leading judgment, with which Sir Stephen Richards agreed. McCombe LJ agreed with the result and the decisive inference on the particular facts, while expressing reservations about the strength of the underlying evidence.

2. A freezing order required a good arguable case, a real risk that judgment would remain unsatisfied because of asset disposal, and circumstances making relief just and convenient. The risk had to be assessed objectively, established by solid evidence and considered separately against each respondent. Establishing a danger of dissipation sufficed; proof on the balance of probabilities was unnecessary. The formulation in Fundo Soberano de Angola v dos Santos requiring dishonesty to indicate that assets were likely to be dissipated was corrected to refer to assets that might be dissipated (paras 33–38).

3. A good arguable case of wrongdoing relevant to dissipation pointed powerfully towards the requisite risk. Significant further evidence might be unnecessary, but there was no automatic inference or firm rule dispensing with further evidence. The court had to scrutinise the particular wrongdoing and its evidential basis. Thane Investments Ltd v Tomlinson (No 1) provided that caution; VTB Capital plc v Nutritek International Corp supported drawing the inference where the wrongdoing bore directly on dissipation. Holyoake v Candy was distinguishable because the complaints there principally concerned coercion (paras 48–60).

4. The arguable wrongdoing here comprised assistance in the very act of dissipation, including participation in breach of an existing freezing injunction. It therefore strongly supported an inference that Madam Su would similarly put her own assets beyond enforcement. Evidence concerning company ownership and control, offshore structures, international transfers and liquid assets reinforced that inference. The judge gave insufficient weight to this evidence collectively. Mr Su's admissions also deserved weight because they were potentially against his interest and supported by other evidence (paras 61–69).

5. The court doubted whether the respondent's notice could reopen matters closely connected with jurisdictional findings for which permission to appeal had been refused. It nevertheless rejected the notice because no clear error of principle justified disturbing the finding. The supposed ease of enforcement in Taiwan was unsupported by evidence and had not been raised by either party. It should not have influenced the assessment (paras 70–78).

6. The judge had overlooked the central dissipation argument and his conclusion was plainly wrong. No countervailing factor prevented relief. The relevant discharge provisions were set aside and the freezing order restored until further order, with supporting worldwide asset disclosure. Madam Su was ordered to bear Lakatamia's costs of the appeal and the relevant application below (paras 79–89; order).

• Court of Appeal (Civil Division): In [2019] EWCA Civ 2203 , unanimously allowed Lakatamia's appeal, set aside the relevant discharge provisions and restored the worldwide freezing order against Madam Su until further order.
• High Court: Males J granted Lakatamia permission to appeal and refused Madam Su permission to appeal on jurisdictional issues.
• High Court, Business and Property Courts: Sir Michael Burton, in [2019] EWHC 1145 (CH), permitted service out of the jurisdiction but discharged the worldwide freezing order against Madam Su. The order continued against the two corporate defendants.
• High Court: Sir Michael Burton initially granted the further worldwide freezing order without notice on 27 February 2019.