Lakatamia Shipping Company Ltd v Nobu Su Ltd
| Jurisdiction | England & Wales |
| Judge | Sir Mark Waller,Lord Justice Longmore,Lord Justice Sullivan |
| Judgment Date | 18 July 2012 |
| Neutral Citation | [2012] EWCA Civ 1195,[2012] EWCA Civ 883 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2011/2736,Case No:–A3/2011/2736 |
| Date | 18 July 2012 |
[2012] EWCA Civ 1195
Master of the Rolls
Lord Justice Longmore
and
Lord Justice Sullivan
Case No:–A3/2011/2736
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION
(COMMERCIAL COURT)
(MR JUSTICE BEATSON)
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Alan Steinfeld QC (instructed by Ince and Co LLP) appeared on behalf of the Appellant.
Mr Noel Casey (instructed by Hill Dickinson LLP) appeared on behalf of the Respondent.
This is an appeal from the decision of Beatson J of 14 October 2011 continuing after argument an ex parte freezing of the judgment granted by Blair J on 22 August of the same year.
It is all about freight forward agreements. Freight forward agreements, which I shall call FFAs, whereby one party agrees to buy agreements for the carriage of cargoes on a particular date at a particular price from another party, and that other party agrees to buy back the agreements on another date at another price, seem to be a staple of modern commerce. As freight rates rise or fall, one or other party may need to cover his position and may do so by entering further FFAs.
Mr Polys Haji-Ioannou and Mr Nobu Su are major businessmen in the shipping trade. They would often enter FFAs in the names of their companies, often one ship companies, Taiwan Maritime Trading Companies, or TMTs, in this case.
Mr Haji-Ioannou alleges that on 6 July 2008 Mr Su told him through a freight derivatives dealer at Clarkson Securities Limited ("Clarksons"), Mr Vassilis Karakoulakis, that some of the companies which make up Mr Su's company empire had become over exposed and that Mr Su was regard it as a big favour if Mr Haji-Ioannou could arrange to buy freight agreements for 600,000 tonnes of cargo per month from Rastanura at a price of 100.65 World Scale Points as at 8 July 2008 in consideration for a promised repurchase of them at a price of 101.65 World Scale Points on 8 August 2008. Such an arrangement would of course provide ready cash for the TMT companies for a month but with an obligation to buy the agreements back a year later. From Mr Haji-Ioannou's point of view this deal would make a profit of about $1.8 million. Mr Haji-Ioannou agreed to this bargain and to negotiate with Mr Su through Mr Karakoulakis; he says he believed that the contract was to be made between a company to be chosen by him on the one hand and Mr Su personally on his own behalf and certain TMT companies.
Mr Haji-Ioannou says therefore that the agreement was one in respect of which Mr Su agreed to be personally liable, as it was being done as a personal favour to Mr Su. It was also to be guaranteed by a company in the TMT group, Ironmonger I Limited, the seventh defendant in this action. The agreement itself is said to have been made orally but is evidenced by the guarantee signed on Ironmonger's behalf and dated 8 July in which it is referred to as:
"the agreement reached between yourselves and Messrs TMT concerning the sale to yourselves and respective buy back of a certain quantity of FFAs."
That was under cover of a letter of the 8 July 2008 which says this:
"Herewith please receive good performance guarantee of respective FFA trades as agreed between principals of Messrs Troodos and TMT with the intervention of Messrs Clarksons Securities of London."
Troodos is a reference to Mr Haji-Ioannou's companies and, as I have already said, TMT is a reference to Mr Su's companies.
Lakatamia Shipping Company, the claimant in the proceedings and Mr Haji-Ioannou's chosen vehicle, performed its part of the bargain, but neither Mr Su nor the TMT companies nor the guarantors have fully performed theirs, although certain part payments have been made.
At a meeting of 11 May 2011, of which there is a contemporary email note, Mr Russell Gardner partner of Hill Dickinson, the claimant's solicitors, met Mr Karakoulakis, the broker at Clarksons through whom the deal had been negotiated. The meeting opened by Mr Karakoulakis, who is referred to in the note as VK, explaining the reasons why Mr Nobo Su, referred to in the note as NS, had needed the facility. He, Mr Karakoulakis, said further that Mr Su would have not predicted the dramatic fall in the markets in late 2008 and accepted that the case was a simple contractual matter, "a failure by NS to buy back". VK said he had worked with both NS and Mr Haji-Ioannou, referred to in the note as PH, and had an "ethical" obligation to resolve the dispute because he had put the deal together "acting for both parties".
The action was then discussed and the last part of Mr Gardner's note says:
" 6. NB VK clarified the following important points:
6.1 The agreement was made after two telephone calls (VK to NS and VK to PH), ie there was not a telephone conference involving all three parties. Those calls took place over the weekend preceding 8 th July 2008 which (I have now checked) was a Tuesday. VK said he did not have a note of the calls but would confirm when they were made. I said there would be telephone records.
6.2 VK drafted both the covering message of 8/7 and the agreement himself. He said that PH had not actually required an agreement but VK had insisted on it to protect his interest.
6.3 VK confirmed that the agreement was with NS personally (see the reference to principal of TMT) and that the expression 'Messrs TMT' had been used deliberately so as to be as wide as possible to include the TMT Group.
6.4. The document was also deliberately drafted as both a performance guarantee and as the contract.
6.5 It was also intended to be subject to English law and that was the intention of the last paragraph."
The gist of this account was sent by Mr Gardner to Mr Karakoulakis the following day, 12 May. That in due course elicited a guarded response that the summary did not entirely reflect what Mr Karakoulakis had said. On 26 August 2011 the defendant's solicitors said that at the meeting Mr Karakoulakis explained that the agreement was discussed and negotiated "with Mr Su as principal of 'TMT'".
By this stage Lakatamia had instituted proceedings and obtained an ex parte freezing injunction from Blair J on 22 August 2011 on the basis that it had an arguable case against Mr Su personally, five of his TMT companies and Ironmonger I as guarantor, and that there was a risk that those defendants might dissipate their assets before judgment. It was this injunction that was continued after argument on both sides by Beatson J.
Two judges of the commercial court have therefore considered that the claimant had a "good arguable case", as is required before a freezing injunction can be granted: see Raza Maritime v Pertamina [1978] QB 644 and Niedersachsen [1983] 2 Lloyds Rep 600 and [1983] 1 WLR 1412, both references given because the judgment of Mustill J reported in Lloyds List assumes some importance in the matter.
It is worth pausing just there to note, as I have said, that two judges of the commercial court have considered the claimant had a good arguable case, and that is not an idle comment because we were shown by Mr Steinfeld QC, who has been representing Mr Su and the other TMT companies in this case, a note of the hearing before Blair J which it appears took place in two parts. The application was made on a Friday and Blair J was presented with the papers with the assistance of counsel; he raised certain doubts about the matter, including whether or not it would be appropriate to make an order against Mr Su personally and said that on the...
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