Lakatamia Shipping Co Limited v Nobu Su (aka Su Hsin Chi; aka Nobu Morimoto) & Ors.

Knowingly combining to dissipate a judgment debtor’s assets in breach of a freezing order can constitute unlawful means conspiracy. Liability requires a combination, unlawful means, an intention to injure and resulting damage. Participation need not involve personally executing the transfers. The Babanaft proviso does not confer immunity from civil liability.

English law also recognises liability for knowingly procuring a violation of rights under a judgment vindicating contractual rights. Foreign law must be pleaded and proved by a defendant who seeks to displace English law. Torts directed at defeating an English judgment and freezing order may be manifestly more closely connected with England under article 4(3) of Rome II.

A defendant cannot defeat causation by suggesting that another wrong would have produced the same loss. Exemplary damages remain exceptional and require more than establishing serious wrongdoing.

Lakatamia, a judgment creditor, had obtained substantial English judgments against Mr Su for breach of an agreement concerning forward freight transactions. A worldwide freezing order restrained dealings with his assets. Lakatamia alleged that Mr Su, his mother, Madam Su, and corporate defendants combined to dissipate proceeds associated with his private aeroplane and two Monaco villas.

Portview held the shares in Cresta, which had held legal title to the villas. Mr Su was their ultimate beneficial owner. Both sets of proceeds were transferred to UP Shipping. Lakatamia alleged that Madam Su owned and controlled that company and received proceeds through further transfers. Blue Diamond, a company owned and controlled by Mr Su, received part of the villa proceeds.

Lakatamia claimed damages for unlawful means conspiracy and knowingly procuring violations of its judgment rights. Madam Su disputed her knowledge, participation, corporate control and receipt of funds. She also disputed the applicable law. The claim against Mr Su was stayed following his bankruptcy, and the corporate defendants were debarred from defending. The principal issues were whether the remaining defendants knowingly participated in the dissipation, which law governed their conduct, and what damages were recoverable.

Judgment for the claimant against the second to sixth defendants in the respects established. The aeroplane claims succeeded against Madam Su and UP Shipping. The Monaco claims succeeded against Madam Su, Portview, Cresta, UP Shipping and Blue Diamond. No relief could presently be ordered against Mr Su because the claim against him was stayed.

1. The evidence established combinations to conceal the proceeds and impede enforcement. Conspiracy could be inferred from the cumulative evidence without identifying the precise occasion of agreement. Contemporary documents, objective facts and probabilities were particularly important when assessing unreliable testimony. Madam Su knew of the freezing order and judgment debt, controlled UP Shipping and received proceeds. Her conduct went beyond that of a bystander. Although participation could be passive, knowingly permitting her company’s accounts to implement these transfers constituted active participation. The suggestion in FM Capital Partners Ltd v Marino that participation must be active was rejected.
2. The transfers breached the freezing order and constituted unlawful means. Knowledge of the relevant facts sufficed without appreciation of their legal consequences. Injury was intended because the defendants’ gains were necessarily obtained at the creditor’s expense. Their financial interests supplied no defence. The Babanaft proviso protected against certain overseas enforcement consequences, but did not exclude civil conspiracy liability. The convoluted transfers were outside the ordinary and proper course of business exception.
3. English law recognised the Marex tort, at least where contractual rights had merged into a judgment. It required a judgment, violation of its rights, causative procurement or inducement, knowledge of the judgment, and realisation that the procured conduct would violate those rights. The defendants’ knowing assistance satisfied those requirements. Separately, the court considered that justification afforded no defence, although that question was academic.
4. English law governed the aeroplane claims because no foreign law had been pleaded and proved. The Monaco claims were manifestly more closely connected with England under article 4(3) of Rome II. Their substance concerned English judgments, an English freezing order and associated English proceedings. The court also considered that the direct damage occurred in England under article 4(1).
5. Alternatively, Monaco law imposed liability. Knowingly assisting the frustration of a foreign judgment or freezing order constituted fault under article 1229 of the Monaco Civil Code, without prior recognition or service. Participation in the same fault attracted joint and several liability. UP Shipping and Madam Su were also liable under article 1022, the action paulienne.
6. The claimant would have recovered US$857,329.73 and €27,127,855.01 absent the wrongdoing. Hypothetical further unlawful dissipation could not defeat causation. Compensatory damages were recoverable in those amounts. Additional enforcement costs would have arisen in any event and were refused. Exemplary damages were also refused: the conduct and adequacy of the substantial compensation did not justify that exceptional remedy. Adverse disclosure inferences reinforced findings otherwise established; no adverse missing-witness inferences were drawn. Consequential matters of principal, interest and costs remained for agreement or further argument.

• Court of Appeal: On 16 December 2019, restored the freezing order against Madam Su after its discharge at first instance: [2019] EWCA Civ 2203 . This was an interlocutory appeal, not the judgment presently being delivered.
• High Court: On 2 May 2019, maintained freezing relief against Portview and Cresta, permitted service out, and discharged the freezing order against Madam Su for lack of a real risk of dissipation: [2019] EWHC 1145 (Comm).
• High Court: Permission to add the aeroplane conspiracy claim was granted on 25 January 2021: [2021] EWHC 203. The present judgment determined the substantive claims against the defendants other than Mr Su, against whom proceedings were stayed.
• Underlying proceedings: Judgments against Mr Su were entered in November 2014 and January 2015. The substantive decision was reported at [2015] 1 Lloyd’s Rep. 216. His proposed appeal did not proceed because the required security was not provided.