Marex Financial Ltd v Garcia

Hearing dates: 24 – 25 January 2017

Judgment Approved

Introduction

In 2013, claims between the Claimant ("Marex") and Creative Finance Limited ("Creative") and Cosmorex Limited ("Cosmorex", together "the Companies") were tried before Field J in the Commercial Court. The claims were in contract, for sums due on an account between Marex as broker and the Companies as its clients in respect of foreign exchange trading.

In accordance with regular practice and on terms set out in an endorsement to the draft, Field J released a draft of his judgment ("the Draft Judgment") on 19 July 2013. The Draft Judgment showed that Marex had succeeded in its claims against the Companies for sums in excess of US$5 million ("the Judgment Debt"). The judgment in final form was handed down on 26 July 2013 and an order was made ("the Judgment").

A freezing order ("the Freezing Order") was then obtained by Marex against the Companies on 14 August 2013. On 23 August 2013 the Freezing Order was ordered to be continued. The Companies made disclosure of their assets pursuant to the Freezing Order; they stated that assets of only US$4,392.48 were held.

The Defendant ("Mr Sevilleja") describes the Companies as, then, his principal trading vehicles for foreign exchange trading. Both of the Companies are incorporated in the British Virgin Islands. It is Marex's case that Mr Sevilleja was the ultimate beneficial owner of the Companies, their controller, their agent, a de facto or shadow director of them and the holder of a power of attorney from them.

Marex alleges that Mr Sevilleja took the opportunity, after the Draft Judgment was released, dishonestly to asset-strip the Companies in order that they would be unable to pay Marex.

The Companies are now in liquidation in the British Virgin Islands. Marex has pursued various other avenues, but now it has commenced proceedings in this jurisdiction against Mr Sevilleja. It claims from him the value which it alleges he dishonestly removed from the Companies, up to the amount of the Judgment Debt (and after credit for some recovery in enforcement proceedings), and various costs.

Mr Sevilleja, who is not resident in this jurisdiction, challenges the jurisdiction of this Court. This judgment addresses that challenge. In the course of his challenge he alleges that someone in Marex's position has no claim in law against someone in his position.

The claim advanced by Marex against Mr Sevilleja

The brief details of claim on the Claim Form are in these terms:

"[Marex] claims damages against [Mr Sevilleja] for inducing or procuring the violation of [Marex's] rights under [the Judgment] dated 26 July 2013, and/or for intentionally causing loss to [Marex] by unlawful means, in particular by dissipating the assets of [the Companies] as more fully set out in the attached Particulars of Claim."

The Particulars of Claim allege that Mr Sevilleja procured the transfer of over US$9.5 million ("the Money") out of the Companies' accounts held in England and thereafter out of the Companies altogether and into his personal control, over the period from 24 July 2013 to 12 August 2013. Although the Particulars of Claim add the words "and thereafter" we are at least largely concerned with the period before the Freezing Order. And within the more limited period between the date of the Draft Judgment and the date of the Judgment Marex alleges that he procured the transfer of sums out of accounts held by the Companies in London to accounts held by the Companies in Gibraltar and Dubai.

In law, Marex alleges that Mr Sevilleja is liable in tort for knowingly inducing and procuring the Companies to act in wrongful violation of Marex's rights under the Judgment. Marex alternatively alleges that Mr Sevilleja has committed the tort of intentionally causing loss to Marex by unlawful means or by unlawful interference with Marex's economic interests.

Jurisdiction

Thus the claims alleged are alleged to be claims in tort. Under Practice Direction 6B paragraph 3.1 the claimant may serve a claim form out of the jurisdiction with the permission of the court under rule 6.36 where:

"(9) A claim is made in tort where –

(a) damage was sustained, or will be sustained, within the jurisdiction; or

(b) damage which has been or will be sustained results from an act committed, or likely to be committed, within the jurisdiction.

Marex argues that the proper construction of "claim … made in tort" is that the liability alleged must simply be shown to be tortious in nature. Mr Sevilleja argues that (as under the wording of the Rule of the Supreme Court, "claims founded on a tort") Marex must address — to the requisite standard — the question whether a tort has been committed: see, for example Briggs, Civil Jurisdiction and Judgments (6 ^th edition, 2015) at [4.71] ff.

It is common ground that on this application the facts must be assumed to be as Marex alleges. Mr Sevilleja's opportunity to answer the allegations of fact will lie at a later stage if the Court has or accepts jurisdiction in the case. But Mr Sevilleja contends that there is, in law, no cause of action in tort, either because the alleged cause of action in tort does not exist or because the elements are not made out or because there is not a completed cause of action.

The parties differ as to whether I should decide the legal issues involved or instead reach a conclusion on whether Marex has a good arguable case ("the better argument") on those issues. On some points Marex would say the test is lower still; that the test of serious question to be tried applies.

"Where a question of law arises in connection with a dispute about service out of the jurisdiction and that question goes to the existence of the jurisdiction (eg whether a claim falls within one of the classes set out in paragraph 3.1 of Practice Direction 6B), then the court will normally decide the question of law, as opposed to seeing whether there is a good arguable case on that issue of law.": VTB Capital plc v Nutriek International Corp [2012] 2 Lloyd's Rep 313; [2012] EWCA Civ 808 at [99].

However this will not apply where "there is an exceptionally difficult and doubtful point of law": Lord Collins while summarising the overall effect of the decision in The Brabo [1949] QC 326 when giving the advice of the Board in Altimo Holdings and Investment Ltd and Others v Kyrgyz Mobil Tel Ltd and Others [2012] 1 WLR 1804; [2011] UKPC 7 at [86]. The principle is shared with the general rule "that it is not normally appropriate in a summary procedure (such as an application to strike out of for summary judgment) to decide a controversial question of law in a developing area, particularly because it is desirable that the facts should be found so that any further development of the law should be on the basis of actual and not hypothetical facts": Altimo Holdings (above) at [84]–[86].

Knowingly inducing and procuring the Companies to act in wrongful violation of Marex's rights under the Judgment

Marex did not have judgment until 24 July 2013. By that date on its case although the Money had been moved it was still within accounts held by the Companies. It was then that it was taken away from the Companies. The rights that Marex had against the Company when the Money was taken away were rights under the Judgment and no longer under the original contract.

Mr Sevilleja denies that there exists a tort of inducing or procuring another to act in wrongful violation of rights under a judgment. Mr David Lewis QC and Mr Richard Greenberg for Mr Sevilleja argued that the Judgment begins a new regime. The rights in contract merge into the Judgment. Whilst non-payment of a contract debt would be an actionable wrong by the debtor, Mr Lewis QC argued that non-payment of a judgment debt is not. The judgment ushers in a new regime, with a range of means of enforcement.

Marex contends that the cause of action is within the principle first recognised in Lumley v Gye (1853) 2 E&B 216. As the claim on which Marex obtained the Judgment was a claim in contract, Mr Alain Choo Choy QC and Ms Sophie Weber for Marex argued that recognition of the existence of the tort where there is violation of rights under the Judgment would be unsurprising given that the existence of the tort is recognised where the violation is of rights in contract.

Non-payment of a judgment debt is an actionable wrong. The Courts have recognised "a principle that where a court of competent jurisdiction has adjudicated a certain sum to be due from one person to another, a legal obligation arises to pay that sum, on which an action of debt to enforce the judgment may be maintained": per Lord Collins in Rubin and Another v Eurofinance SA; In re New Cap Reinsurance Corpn Ltd [2013] 1 AC 236 at [9], and see further Williams v Jones (1845) 13 M&W 628 at 633 per Pollock CB; ED&F Man (Sugar) v Haryanto unreported 17 July 1996 per Leggatt LJ and Kuwait Oil Tanker v Al-Bader [2008] EWHC 2432 at [8] per Teare J. This is the theoretical basis for the enforcement of foreign judgments at common law, but it is nonetheless a principle and not a fiction confined to that area of common law.

The last of the cases mentioned refers to implied contract as the juridical basis. The case was produced by Mr Lewis QC and Mr Greenberg in the course of the hearing in...