Lakatamia Shipping Company Ltd & Ors v Su & Ors

A prior refusal to discharge or vary orders generally requires a material change of circumstances before the application can be renewed. Bankruptcy alone may not constitute such a change where the statutory provisions relied upon concern enforcement and fresh proceedings, rather than discharge or variation of existing orders. An agreed adjournment of an examination as to assets may constitute a sufficient change for reconsidering a passport or jurisdiction order. Such an order may properly continue where an annulment application remains pending, a further examination may be required, the trustee needs time to assess the position, and related contempt proceedings remain imminent. A freezing, disclosure or search order may remain in force while subject to the court’s supervision and the trustee’s involvement. A requirement to disclose the source of funds used for legal expenses applies even where the funds are supplied by third parties.

The claimants sought directions concerning existing freezing, disclosure, search and passport or jurisdiction orders made in the continuing proceedings against Mr Su. A previous judgment by Waksman J had refused an application to discharge or vary the orders. That judgment was subject to an anticipated appeal, but remained operative.

The present application followed an agreed adjournment of Mr Su’s examination as to assets. The court considered whether that adjournment constituted a change of circumstances, whether the bankruptcy affected the existing orders, whether documents obtained under the search order could be used in related proceedings, and whether Mr Su had to disclose the source of funds being spent on legal representation.

1. Existing orders. There was no basis to discharge or vary the freezing, disclosure or search orders. Mr Su’s bankruptcy was not a sufficient change of circumstance. Section 285 of the Bankruptcy Act concerned enforcement proceedings and fresh proceedings; it did not require discharge or variation of the existing orders.
2. Passport and jurisdiction orders. The agreed adjournment of the examination as to assets was capable of constituting a change of circumstance. The passport and jurisdiction orders were continued until 31 July. The pending challenge to the bankruptcy created a real possibility that the examination would be revived if the bankruptcy were annulled. The orders remained relevant to securing that examination.
3. The trustee’s first effective interview with Mr Su was imminent and the trustee might seek to restrain him from leaving the jurisdiction. Fourteen days would be insufficient for the trustee to assess the information available. The impending contempt application was a subsidiary factor, but was not independently sufficient.
4. The claimants could consider and use the 38,000 documents provided by the independent lawyer, including in the bankruptcy proceedings and for possible third-party proceedings, subject to further permission to issue proceedings and to the court’s supervision under s 285 and the trustee’s involvement.
5. The order permitting reasonable expenditure on living expenses and legal advice required Mr Su to disclose the source of funds used for his legal expenses. That obligation applied even where the money was supplied or loaned by third parties.

Both sides had liberty to apply. A further exceptional extension of the passport order was not ruled out if appropriate circumstances arose.

The judgment records that Waksman J had previously refused an application to discharge or vary the orders. That judgment was subject to a proposed appeal in July and remained operative pending that appeal. The present court continued the passport and jurisdiction orders until 31 July.