High Court Judgment Untangles Financial Web in Lakatamia Shipping Company Case, Rules Against Defendants in Conspiracy Allegations

Citation: [2023] EWHC 3023 (Comm)
Judgment on

Introduction

In the High Court of Justice case of Lakatamia Shipping Company Limited v Tseng Yu Hsia & Anor [2023] EWHC 3023 (Comm), a complex web of financial transactions, asset transfers, and allegations of conspiracy was untangled. This article provides a detailed analysis of the legal principles employed by Mr Justice Foxton in reaching a verdict that included a judgment on the merits against Ms Tseng Yu Hsia and a default judgment against Ms Chiharu Morimoto.

Key Facts

The litigation revolves around efforts by Lakatamia Shipping Company Limited (Lakatamia) to recover judgment debts from Mr Nobu Su, with claims extending to other involved parties. The case focuses on the unlawful means conspiracy and the so-called Marex tort, arising from previous court judgments, and whether certain actions were in breach of the Blair Freezing Order. Lakatamia alleged that the Respondents were complicit in conspiracy to dissipate assets owed under a judgment against Mr Su, specifically regarding aircraft sale proceeds and the sale of Monaco villas (collectively called the “Sale Proceeds”).

Lakatamia asserted that Ms Tseng and Ms Morimoto were parties to schemes that intended to evade Lakatamia’s recovery attempts. The charges were largely based on the handling and distribution of the Sale Proceeds and, in Ms Morimoto’s case, transferred Tokyo property sale proceeds.

Applicable Law

The judgment clarified that English law applied by default, given the absence of plea for foreign law’s application, in alignment with the decision in FS Cairo (Nile Plaza) LLC v Brownlie [2021]. The court also determined that both claims were governed by English law after considering the relevant legal principles, reaffirming the principle that a party cannot opt out of a particular rule of law without specifically raising it.

Unlawful Means Conspiracy

To establish unlawful means conspiracy, it is necessary to show a combination between parties with the intention to injure, combined with the use of unlawful means causing loss to the target. The court established Ms Tseng’s knowledge of the Blair Freezing Order and Cooke Judgment Debt, concluding her involvement in the distribution and concealment of Sale Proceeds breached the terms of the freezing order and injured Lakatamia. The legal principles follow the elements outlined in FM Capital Partners Ltd v Marino [2019].

The Marex Tort

The Marex tort, which deals with the unlawful inducement or procurement of breaches of judgment rights, was directly addressed. The court followed established elements of the Marex tort, such as the entry of a judgment in favor of the claimant, the defendant’s knowledge of said judgment, and the procurement or inducement of a breach of that judgment’s rights.

Adverse Inferences

While the court declined to draw adverse inferences from Ms Tseng’s non-participation in document disclosure or evidence, acknowledging the defendant’s right to avoid self-incrimination, it accepted that her failure to engage with litigation and comply with Court orders supported Lakatamia’s allegations.

Service and Default Judgment

The Court found service to be duly performed as per the evidence provided, both through convention methods and via email in Ms Tseng’s case, despite her lack of engagement with the proceedings. The court detailed the conditions precedent for the default judgment as per the CPR, concluding in favor of Lakatamia on the substantive claim against Ms Morimoto, but not for the so-called Litigation Conspiracy due to uncertainties surrounding its recognition under English law.

Outcomes

The court awarded Lakatamia judgment against Ms Tseng for damages in relation to the Aeroplane Sale Proceeds and Monaco Sale Proceeds, including interest. In Ms Morimoto’s case, default judgment was granted for the sale proceeds of a Tokyo property and associated interest. Cost allocations were made reflective of the work done and complexity related to each defendant.

Conclusion

Justice Foxton’s meticulous dissection of the facts in light of relevant tort law principles, specifically unlawful means conspiracy and the Marex tort, led to comprehensive judgments against both defendants. The court leveraged established legal precedents to navigate the proceedings amid non-engagement by the defendants. This case affirms the critical nature of the freezing orders in asset recovery and serves as a cautionary tale for those who might consider circumventing such directives. It underscores the courts’ capability to enforce judgments despite complex attempts to dissipate assets and the reticence of involved parties.