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Lakatamia Shipping Company Ltd v Nobu Su (aka Su Hsin Chi; aka Nobu Morimoto)

Judgment Cited authorities 115 Cited in 23 Precedent Map Related
Vincent
JurisdictionEngland & Wales
JudgeMr Justice Bryan
Judgment Date08 July 2021
Neutral Citation[2021] EWHC 1907 (Comm)
Docket NumberCase No: CL-2019-000141
CourtQueen's Bench Division (Commercial Court)
Categories
Between:
Lakatamia Shipping Co Limited
Claimant
and
(1) Nobu Su (aka Su Hsin Chi; aka Nobu Morimoto)
(2) Toshiko Morimoto
(3) Portview Holdings Limited
(4) Cresta Overseas Limited
(5) UP Shipping Corporation
(6) Blue Diamond Sea Transport LLC
Defendants

[2021] EWHC 1907 (Comm)

Before:

THE HON. Mr Justice Bryan

Case No: CL-2019-000141

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS

OF ENGLAND AND WALES

COMMERCIAL COURT (QBD)

Royal Courts of Justice

Rolls Building, Fetter Lane

London, EC4A 1NL

S.J. Phillips QC, N.G. Casey, Stephen Du and James Goudkamp (instructed by Hill Dickinson LLP) for the Claimant

David Head QC and Georges Chalfoun (instructed by Baker & McKenzie LLP) for the Second Defendant

Hearing dates: 1, 2, 8, 9, 10, 11, 15, 16, 17, 18, 22, 23, 24, 25, 29, 30 and 31 March 2021

Judgment supplied to the parties in draft on 2 July 2021

Judgment Approved

Mr Justice Bryan The Hon.

INDEX

A. INTRODUCTION

B. APPLICABLE LEGAL PRINCIPLES

B.1 ENGLISH LAW PRINCIPLES PLEADING AND PROVING FRAUD

B.2 DOCUMENTARY EVIDENCE

B.3 CIRCUMSTANTIAL EVIDENCE AND INFERENTIAL CASES

B.4 CULTURAL DIFFERENCES AND THE ASSESSMENT OF THE FACTS

B.5 THE CORPORATE VEIL

B.6 APPLICABLE LAW (INTRODUCTION)

B.7 UNLAWFUL MEANS CONSPIRACY

B.8 THE MAREX TORT

B.9 MONACO LAW

B.9.1 INTRODUCTION – THE EXPERTS

B.9.2 ARTICLE 1229 OF THE MONACO CIVIL CODE

B.9.3 ARTICLE 1022 – the Action Paulienne

C. THE PLEADED CONSPIRACIES

C.1 THE AEROPLANE CONSPIRACY

C.2 THE MONACO CONSPIRACY

D. THE FACTUAL WITNESSES

D.1 LAKATAMIA'S FACTUAL WITNESSES

D.2 MADAM SU

E. THE CHRONOLOGY OF EVENTS

E.1 THE ORIGINS OF THE TMT GROUP OF COMPANIES

E.2 THE DEATH OF MR SU SENIOR AND THE RETURN OF MR SU

E.3 MR SU'S INVOLVEMENT IN DERIVATIVES AND THE FFA CONTRACT

E.4 THE UNDERLYING PROCEEDINGS AND THE BLAIR FREEZING ORDER

E.5 JUDGMENT AGAINST MR SU AND THE ATTEMPTED APPEAL

E.6 THE AEROPLANE

E.6.1 THE AEROPLANE'S HISTORY AND OWNERSHIP STRUCTURE

E.6.2 THE SALE OF THE AEROPLANE

E.6.3 EVENTS ON 28 MAY 2015

E.7 THE MONACO VILLAS

E.7.1 THE ACQUISITION OF THE MONACO VILLAS

E.7.2 MADAM SU's INVOLVEMENT IN THE MONACO VILLAS

E.7.3 SUBSEQUENT EVENTS RELATING TO THE MONACO VILLAS

E.7.4 THE MONACO SALE PROCEEDS

E.7.5 MADAM SU'S KNOWLEDGE OF THE MONACO SALE PROCEEDS

E.7.6 THE REMINDERS EMAIL

E.7.7 PAYMENTS OUT FROM UP SHIPPING

F. SUBSEQUENT EVENTS

F.1 THE PASSPORT ORDER AND TRANSFER OF FUNDS

F.2 MR SU'S CROSS-EXAMNATION AS TO HIS MEANS

F.3 THE BURTON FREEZING ORDER AND SUBSEQUENT EVENTS

G. MADAM SU'S KNOWLEDGE

G.1 INTRODUCTION

G.2 MADAM SU'S INVOLVEMENT IN THE FAMILY BUSINESS

G.3 MADAM SU's MANAGEMENT OF COMPANY ACCOUNTS HELD WITH DNB

G.4 MADAM SU'S OWNERSHIP OF GREAT VISION

G.5 MADAM SU'S FUNDING OF MR SU'S LIFESTYLE

G.6 MR SU'S LETTERS WRITTEN WHILST DETAINED IN LIVERPOOL

G.7 FINDING RE: MADAM SU'S KNOWLEDGE

H. MADAM SU AND UP SHIPPING

I. MS TSENG

J. LIABILITY

J.1 OVERVIEW

J.2 THE AEROPLANE CONSPIRACY

J.2.1 APPLICABLE LAW

J.2.2 UNLAWFUL MEANS CONSPIRACY

J.2.3 THE MAREX TORT

J.3 THE MONACO CONSPIRACY

J.3.1 APPLICABLE LAW

J.3.2 LIABILITY UNDER ENGLISH LAW

J.3.2.1 UNLAWFUL MEANS CONSPIRACY

J.3.2.2 THE MAREX TORT

J.3.3 LIABILITY UNDER MONACO LAW

J.3.3.1 LIABILITY UNDER ARTICLE 1229

J.3.3.2 LIABILITY UNDER ARTICLE 1022 (action paulienne)

J.4 THE OTHER DEFENDANTS

K. ADVERSE INFERENCES

K.1. FAILURE TO CALL WITNESSES

K.2 ADEQUACY OF MADAM SU'S DISCLOSURE

L. QUANTUM

M. CONCLUSION

A. INTRODUCTION

1

In this action Lakatamia Shipping Co Ltd (“Lakatamia”) advances two claims against the Defendants, the first an alleged cause of action in unlawful means conspiracy as to whether the Defendants including the Second Defendant Toshiko Morimoto (“Madam Su”) conspired together to injure Lakatamia by unlawful means, namely by the dissipation of two assets of Madam Su's son, the First Defendant Nobu Su (aka Su Hsin Chi; aka Nobu Morimoto) (“Nobu” Su or “Mr Su”), namely the net sale proceeds of two Monegasque villas (the “Monaco Sale Proceeds”) and a private jet (the “Aeroplane Sale Proceeds”) in breach of a World Wide Freezing Order (“WFO”) which was made against Mr Su by Blair J on 19 August 2011 in related Commercial Court proceedings (Claim 2011 Folio No. 357) (the “Underlying Proceedings”) to which Mr Su is still subject (the “Blair Freezing Order”), and secondly an alleged cause of action premised on the intentional violation of rights in a judgment debt (i.e. the so-called Marex tort, see Marex Financial Limited v Sevilleja [2017] EWHC 918 (Comm)).

2

In relation to each cause of action the Court is essentially concerned with two principal questions:-

(1) Did Madam Su and the corporate Defendants know that Mr Su was subject to the Blair Freezing Order (for the purposes of the tort of conspiracy) or owed the Judgment Debt (for the purpose of the Marex tort)?

(2) Did Mr Su, Madam Su and the corporate Defendants (and possibly others) combine to dissipate the Monaco Sale Proceeds and Aeroplane Sale Proceeds in breach of the Blair Freezing Order?

3

If the answer to these two questions is in the affirmative, Lakatamia says that the essential elements of an unlawful conspiracy to injure Lakatamia between Madam Su, Mr Su and the corporate Defendants are made out and, additionally, Madam Su and the corporate Defendants knowingly procured Mr Su's failure to discharge the Judgment Debt (the Marex tort).

4

In order even to introduce the background to the action it is necessary to say something at a very high level about the history of matters and how this action has come about. What follows is not understood to be controversial in terms of the facts that are set out. Where facts relate to matters in issue they are, in any event, addressed in due course below.

5

In relation to the Underlying Proceedings (and as part of the backdrop to events leading up to the present action), the entity Taiwan Maritime Transport Co Ltd (“TMT”) was established by Mr Su Ching Wun, Madam Su's late husband (“Mr Su Senior”) in 1958. The evidence before me is that TMT became a very successful company and was very lucrative for the Su family. Mr Su Senior and Madam Su had one son (the First Defendant Nobu/Mr Su), and 5 daughters.

6

Mr Su Senior died in 2001. By then the family business had expanded to become a substantial group of companies and Mr Su had become its Chief Executive Officer. Madam Su's role in the TMT group companies and the family business before her husband's death is (but only to an extent) in issue before me. Her role (if any) after her husband's death is very much in issue before me, and is at the very heart of Lakatamia's allegations against her.

7

What is not in issue is that, after Mr Su succeeded his father, he made sweeping changes to the business, and embarked on massive speculation in the market in forward freight rates, trading in derivative instruments through various companies in the TMT group, including TMT Co Ltd, Liberia (“TMT Liberia”). Since the financial crisis in 2008 (and as a result of his abject mismanagement of the successful business inherited from his father) he brought that business to its knees.

8

More specifically, in the context of the Underlying Proceedings and this action, in the summer of 2008, he had a desperate need for liquidity, and TMT Liberia was unable to meet the margin calls being made by the Royal Bank of Scotland (“RBS”), the bank through which it held its substantial open positions. Mr Su therefore sought, through the offices of Mr Vassilis Karakoulakis of Clarksons, to obtain assistance from various wealthy ship-owning interests in Greece, including Mr Polys Haji-Ioannou, who is the principal of Lakatamia.

9

Over the weekend of 5/6 July 2008, Mr Haji-Ioannou and Mr Su agreed that Lakatamia would buy FFAs corresponding to 600,000 metric tonnes per calendar month in 2009 on Route TD3 (the equivalent of three VLCCs trading constantly over a year) at a price of 100.65 worldscale points; and that a month later Mr Su would buy the position back at a fixed price of 101.65 worldscale points (“the FFA Contract”). This was an enormous trade representing 1.7% of the total volume of FFAs traded through the London Clearing House in 2008. Lakatamia would earn a guaranteed profit on the transaction of 1 worldscale point per metric tonne, and so, had the FFA Contract been performed in accordance with its terms, the profit to Lakatamia would have been US$1.8m.

10

Lakatamia purchased this massive position on 8 July 2008. By 8 August 2008, the market had, however, fallen and Mr Su did not buy the position back. Over the following weeks and months, he bought back part of the position; but not at the agreed price. Lakatamia was thus left with a massive unwanted exposure and faced ever mounting margin calls from RBS. The total loss suffered by Lakatamia on the unwanted FFA positions (net of the positions that Mr Su had bought back) was US$79,633,538.25, and whilst Mr Su initially made some payments against this liability between 8 th October 2008 and 9 th October 2009 (cash payments of US$32,303,195 through two companies in the TMT group) and caused companies within the TMT group to charter vessels to Lakatamia at reduced rates, (giving discounts equating to US$11,276,033.01), eventually these payments and discounts dried up.

11

On 24 March 2011, Lakatamia issued the Underlying Proceedings. On 22 August 2011, Lakatamia applied ex parte for the Blair Freezing Order due to concerns Lakatamia had that Mr Su and the other defendants in that action would dissipate their assets to frustrate any judgment. Blair J granted the freezing order sought. On the return date it was contended by Mr Su that he had no personal liability...

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