Lakatamia Shipping Co Ltd v Nobu Su/Hsin Chi Su (aka Su Hsin Chi; aka Nobu Morimoto) & Ors [2025] EWCA Civ 1389

[2025] EWCA Civ 1389Case No CA-2024-001802
IN THE COURT OF APPEAL (CIVIL DIVISION)
[2024] EWHC 1749 (Comm)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
KING’S BENCH DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT
Simon Colton KC (sitting as a Deputy High Court Judge)
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 05/11/2025
Before
SIR JULIAN FLAUX, CHANCELLOR OF THE HIGH COURTLORD JUSTICE MALESLADY JUSTICE FALK
Between
LAKATAMIA SHIPPING CO. LTDAppellant/NOBU SU/HSIN CHI SU (aka SU HSIN CHI; aka NOBU MORIMOTO)Respondents/DefendantsCHANG TAI-CHOURespondentARNAUD ZABALDANORespondent
S. J. Phillips KC & James Goudkamp (instructed by Hill Dickinson LLP) for AppellantThe First Respondent appeared remotely in person for in person for The Second and Third Respondents did not appear and were not representedHearing Hearing dates: 14 & 15 October 2025
Approved JudgmentThis judgment was handed down remotely at 10.30am on Wednesday 5 November 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives..............................
[1]This is an appeal against the dismissal of a claim by Lakatamia Shipping Co Ltd for damages as a result of the dissipation of funds which were meant to be frozen by a worldwide freezing order but were transferred to a company called UP Shipping Corporation which was owned and controlled by Mr Nobu Su’s mother, Madam Su. Lakatamia brought claims against the defendants for unlawful means conspiracy and inducement of a breach of rights existing under a judgment (the so-called Marex tort, derived from the decision in Marex Financial Ltd v Sevilleja Garcia [2017] EWHC 918 (Comm) [2017] 4 WLR 105). These claims were dismissed by Mr Simon Colton KC, sitting as a Deputy High Court judge, after a trial in which the first defendant (Mr Su) participated remotely, but in which the second and third defendants (Mr Chang Tai-Chou and Maître Arnaud Zabaldano) took no part.[2]The transfer of funds to UP Shipping was effected by Maître Zabaldano on the instructions of Mr Chang, who was in turn instructed by Mr Su.[3]The Deputy Judge dismissed the claim against Mr Chang because he was not satisfied that Mr Chang knew either that Mr Su was bound by the freezing order or that Mr Su owed the judgment debt at the time when he gave instructions to Maître Zabaldano which put the funds in question beyond the reach of the freezing order. Lakatamia requires permission to challenge these factual conclusions, which it says are perverse. I would grant such permission.[4]As to Maître Zabaldano, the Deputy Judge’s essential reason for dismissing the conspiracy claim was that Maître Zabaldano, a Monegasque lawyer outside the territorial jurisdiction of the English court, had a defence by reason of what is known as the ‘Babanaft proviso’ (Babanaft International Co SA v Bassatne [1990] Ch 13). His essential reason for dismissing the Marex claim against Maître Zabaldano was that Maître Zabaldano honestly believed that he was entitled and obliged to transfer the funds in question beyond the reach of the freezing order, as a result of which either the mental element of the tort was not proved or Maître Zabaldano had a defence of justification.[5]That left the conspiracy claim against Mr Su, who had directed Mr Chang to cause Maître Zabaldano to transfer the funds beyond the reach of the freezing order. However the Deputy Judge dismissed that claim on the basis that he had dismissed the claims against Mr Chang and Maitre Zabaldano, with the consequence that Mr Su could not be liable in conspiracy on his own.[6]Lakatamia challenges these conclusions.[7]I have decided that the Deputy Judge’s factual conclusions concerning Mr Chang’s knowledge are plainly wrong and that his holding that the Bananaft proviso afforded a defence to Maître Zabaldano is contrary to binding Supreme Court authority. That means that all three defendants are liable in unlawful means conspiracy and the appeal must be allowed.[8]In these circumstances it will be unnecessary to consider at any length what the Deputy Judge said about the Marex tort, but I should not be taken as endorsing some of his conclusions, which must remain open in this court for decision in a future case.

The parties

[9]Lakatamia is a Liberian company. In 2008 it entered into a contract with Mr Su, a Taiwanese businessman, by which it took over Mr Su’s positions in derivative instruments priced by reference to the freight forward market. Mr Su was supposed to repurchase those positions a month later but, in breach of the contract, did not do so.[10]Mr Chang is, or was until December 2017 when he resigned at the request of Mr Su, a director of numerous companies beneficially owned by Mr Su. One of those companies was Cresta Overseas Ltd.[11]Maître Zabaldano is one of only a small number of Avocats-Défenseurs practising in Monaco. He has been in legal practice since 2001, since 2011 as the managing partner of his own firm, Zabaldano Avocats. His firm was instructed to act for Cresta Overseas in circumstances described below.

The current proceedings

[12]The current proceedings were begun by the issue of a claim form dated 6th July 2022 claiming that, as a result of the transfer of funds to UP Shipping, all three defendants were liable for unlawful means conspiracy and that Mr Chang and Maître Zabaldano were liable for intentionally and knowingly inducing a violation of rights in a judgment debt.[13]The claim form was served on Mr Su in this country and permission was granted to serve it on the remaining defendants out of the jurisdiction. Mr Su never formally acknowledged service, but he did represent himself remotely at various pre-trial hearings.[14]The claim form was served on Mr Chang in Taiwan but he has not filed an acknowledgment of service and has taken no part in these proceedings at any stage.[15]The claim form was served on Maître Zabaldano in Monaco, as a result of which he instructed English solicitors and counsel to acknowledge service and challenge the jurisdiction of the English court. For the purpose of this challenge Maître Zabaldano served a witness statement dated 22nd December 2022 in which, among other things, he said that he did not know at the time of the transfer of funds to UP Shipping that Mr Su was the ultimate beneficial owner of Cresta Overseas; rather, he was informed that the ultimate beneficial owner was an individual who was not Mr Su.[16]That challenge was rejected by Mr Justice Bryan (Lakatamia Shipping Co Ltd v Su [2023] EWHC 1874 (Comm) [2024] 1 WLR 746). Maître Zabaldano sought permission to appeal to this court but permission was refused by Lord Justice Phillips on 11th October 2023. Since then Maître Zabaldano has taken no further part in these proceedings.[17]Lakatamia did not seek a default judgment against Mr Chang or Maître Zabaldano and the trial of the action against all three defendants came before the judge on 13th June 2024. As it accepted, Lakatamia therefore bore the burden to prove its case on the balance of probabilities. Mr Su represented himself remotely from an unspecified location outside the territorial jurisdiction of the court, as he did on the hearing of this appeal. Lakatamia accepted also that it had a duty of fair presentation whereby it was obliged to draw to the attention of the court any points that might be to the benefit of the unrepresented defendants (cf. CMOC Sales & Marketing Ltd v Persons Unknown [2018] EWHC 2230 (Comm), para 14, citing Braspetro Oil Services Co v FPSO Construction Inc [2007] EWHC 1359 (Comm), para 33).

Background

[18]The litigation between Lakatamia on the one hand and Mr Su and others associated with him on the other has a long history, details of which can be found in numerous judgments, both of this court and the Commercial Court, over the last 15 years. For the purpose of this appeal, the facts can be summarised as follows.

The original English proceedings

[19]On 19th August 2011 Mr Justice Blair made a worldwide freezing order against Mr Su and various companies legally or beneficially owned by him and/or members of his family. These included at least three companies of which Mr Chang was a director. The freezing order and its successors, with variations made from time to time, has been in force ever since.[20]In two judgments of November 2014 and January 2015, Mr Justice Cooke entered judgments against Mr Su and his companies in sums totalling over US $47.6 million (‘the liability judgments’). Mr Su and his companies sought permission to appeal, which was granted, on condition that security for the judgment debt was provided. However, security was not provided and the appeal lapsed on 12th June 2015. Neither Mr Su nor his companies has voluntarily discharged any part of the judgment debt which, including interest and costs, now stands at over US $60 million. Lakatamia has made extensive efforts to enforce the judgment debt, in the course of which it has obtained access to many thousands of documents, which it has permission to use in these proceedings. In the course of these efforts it obtained information about the sale of two villas in Monaco which has given rise to the present proceedings.

The villas and their proceeds of sale

[21]Cresta Overseas was a company of which Mr Su was a director until 13th May 2013 when he appointed his 18 year old daughter, Ms Airi Morimoto, to replace him. The judge found that Mr Su was the beneficial owner of the company, which owned two villas in Monaco which were mortgaged to Barclays Bank. The mortgage loan agreement had been signed by Mr Su on behalf of Cresta Overseas, and was guaranteed by Mr Su personally.[22]By 2015 Cresta Overseas had defaulted on the loan from Barclays, and Barclays sought to enforce its security. On 16th March 2015, it issued proceedings in the Monaco court against Cresta Overseas, seeking the auction of the villas in order to recoup its loans. Maître Zabaldano was retained by Cresta Overseas. On 9th April 2015 Mr Chang replaced Ms Morimoto as the sole director of Cresta Overseas. On 18th June 2015 a Mr James Garrett became a director of the company.[23]On 30th September 2015 Lakatamia’s Monaco lawyer wrote to the lawyers acting for Barclays, giving notice of the worldwide freezing order, stating that Mr Su appeared to have an interest in Cresta Overseas, and drawing attention to the penal notice on the first page of the freezing order. The letter was copied to Maître Zabaldano. Maître Zabaldano’s evidence in his challenge to the jurisdiction of the English court was that he took note of the letter and its attachments, but found it irrelevant ‘to what we were doing for Cresta in Monaco as against Barclays, which was to prevent the Villas from being sold’. He said that he thought the freezing order was of no consequence because the letter was merely copied to his firm and because Lakatamia’s lawyers never set out how he should act as a result of the English decisions ‘or how we could legitimately act in defiance of our instructions from Cresta’.[24]On 20th October 2015 Lakatamia applied to intervene in the proceedings between Barclays and Cresta Overseas in Monaco. Its application recited the liability judgments, the failure of Mr Su’s appeal, and the freezing order, and submitted that Cresta Overseas appeared to be controlled by Mr Su. It submitted that Lakatamia could be prejudiced if the auction went ahead resulting in money being paid to Cresta Overseas which could ultimately benefit Mr Su, contrary to the English freezing order. The application to intervene was rejected the next day, on the basis that the materials relied on by Lakatamia had not been translated into French, and were therefore excluded from the proceedings, leaving Lakatamia with nothing to support its claims.[25]The villas were sold on 21st October 2015 for a total price of €65.1 million. The sale price was transferred in November 2015 to the account of the Caisse de Dépôts et Consignations in Monaco. This was usual procedure for a court-ordered sale to ensure that all creditors received their share of the sale proceeds. Most of the proceeds were distributed in February 2017. Some €34.6 million was paid to Barclays and €27,127,855.01 was paid to Maître Zabaldano as the lawyer for Cresta Overseas, into his client account.[26]On 21st February 2017, on Mr Su’s instruction, Mr Chang instructed Maître Zabaldano to transfer all the remaining cash proceeds from the sale of the villas from his client account to the account of UP Shipping, save for about €200,000 which Maître Zabaldano was instructed to keep as a retainer to continue acting on behalf of Cresta Overseas in its dispute with Barclays. Maître Zabaldano replied the same day to Mr Garrett, asking him to sign the instruction in addition to Mr Chang, but was told that Mr Garrett was no longer a director. Accordingly Maître Zabaldano accepted the instruction signed by Mr Chang alone and, on 23rd February 2017, directed his bank to transfer the money held in his client account for Cresta Overseas to UP Shipping. Converted into US dollars, the amount transferred was US $26,712,911.68.[27]UP Shipping was another of the companies of which Mr Chang was a director. It is the transfer to UP Shipping of the money held by Maître Zabaldano which has given rise to the present claims against the defendants.[28]Some months after the transfer, on 6th July 2017, the Monaco courts recognised the liability judgments. By then, however, the money had gone.[29]On 17th April 2018 Maître Zabaldano sent an email to Mr Su in which he stated his understanding that ‘you no longer are the UBO’ of Cresta Overseas, thus indicating an understanding that Mr Su had previously been the ultimate beneficial owner of that company.[30]On 27th and 28th February 2019, Mr Su was cross-examined as to his assets before Sir Michael Burton GBE. He was asked about the €27 million paid to Maître Zabaldano in February 2017. He said that he believed that the money had gone back to his family, although he claimed that this was on his mother’s instruction. This cross-examination was followed by an application to commit Mr Su to prison for contempt of court for dissipating the proceeds of sale of the villas. On 29th March 2019 Sir Michael Burton committed Mr Su to prison for 21 months. The judge’s findings[31]On the basis of these facts the Deputy Judge made the following important findings:(1) Maître Zabaldano transferred some €27 million of the proceeds of sale of the villas owned by Cresta Overseas to UP Shipping’s bank account on Mr Chang’s instruction, and those proceeds were thereafter further dissipated upon UP Shipping’s receiving them.(2) Mr Su was subject to the freezing order and owed the judgment debt at the time of the transfer.(3) Mr Su was the beneficial owner of these funds, which therefore fell within the scope of the freezing order.(4) The transfer of these funds to UP Shipping was thus a breach of the freezing order.(5) If the funds had remained in Monaco, Lakatamia would have been able to enforce the liability judgments against them once those judgments were recognised in Monaco on 6th July 2017.[32]The Deputy Judge found also that it was more likely than not that, at the time when Maître Zabaldano ordered the transfer of the proceeds of sale of the villas to UP Shipping, he knew that Mr Su was bound by the freezing order and that the judgment debt had not been discharged; and that he knew also of Mr Su’s ultimate beneficial ownership of Cresta Overseas. The Deputy Judge gave reasons for making these findings which it is unnecessary to set out, but which fully justify the findings which he made. Having done so, he said that in consequence of these findings, he was satisfied that Maître Zabaldano knew that the transfer of the proceeds would place Mr Su in breach of the freezing order and would hinder Lakatamia’s ability to enforce the liability judgments.[33]As the Deputy Judge recognised, the finding that Maître Zabaldano knew that Mr Su was the ultimate beneficial owner of Cresta Overseas meant that Maître Zabaldano had given false evidence on the central issue in the case in his witness statement challenging the jurisdiction of the English court. It is therefore somewhat surprising that the Deputy Judge did not regard this lie as undermining what he described as the overall thrust of Maître Zabaldano’s evidence (which had not, of course, been tested by cross-examination) that he genuinely believed that he was entitled, and obliged, to transfer the sale proceeds to UP Shipping. However, for reasons which I shall explain, it is unnecessary to pursue Lakatamia’s challenge to this finding as to Maître Zabaldano’s belief.

Unlawful means conspiracy

[34]I deal first with Lakatamia’s claim for damages for unlawful means conspiracy.

The law

[35]The elements of unlawful means conspiracy were summarised by Mrs Justice Cockerill in FM Capital Partners Ltd v Marino [2018] EWHC 1768 (Comm), para 94. Her summary has been adopted in a number of cases at first instance, including by the Deputy Judge in the present case. She said:
‘94. The elements of the cause of action are as follows: i) A combination, arrangement or understanding between two or more people. It is not necessary for the conspirators all to join the conspiracy at the same time, but the parties to it must be sufficiently aware of the surrounding circumstances and share the same object for it properly to be said that they were acting in concert at the time of the acts complained of: Kuwait Oil Tanker at [111]. ii) An intention to injure another individual or separate legal entity, albeit with no need for that to be the sole or predominant intention: Kuwait Oil Tanker at [108]. Moreover: a) The necessary intent can be inferred, and often will need to be inferred, from the primary facts – see Kuwait Oil Tanker at [120-121], citing Bourgoin SA v Minister of Agriculture [1986] QB 716: “[i]f an act is done deliberately and with knowledge of the consequences, I do not think that the actor can say that he did not 'intend' the consequences or that the act was not 'aimed' at the person who, it is known, will suffer them”. b) Where conspirators intentionally injure the claimant and use unlawful means to do so, it is no defence for them to show that their primary purpose was to further or protect their own interests: Lonrho Plc v Fayed [1992] 1 AC 448, 465-466; see also OBG v Allan [2008] 1 AC 1 at [164-165]. c) Foresight that his unlawful conduct may or will probably damage the claimant cannot be equated with intention: OBG at [166]. iii) In some cases, there may be no specific intent but intention to injure results from the inevitability of loss: see Lord Nicholls at [167] in OBG v Allan, referring to cases where: “The defendant's gain and the claimant's loss are, to the defendant's knowledge, inseparably linked. The defendant cannot obtain the one without bringing about the other. If the defendant goes ahead in such a case in order to obtain the gain he seeks, his state of mind will satisfy the mental ingredient of the unlawful interference tort.” iv) Concerted action (in the sense of active participation) consequent upon the combination or understanding: McGrath at [7.57]. v) Use of unlawful means as part of the concerted action. There is no requirement that the unlawful means themselves are independently actionable: Revenue and Customs Commissioners v Total Network [2008] 1 AC 1174 at [104]. vi) Loss being caused to the target of the conspiracy.’ i) A combination, arrangement or understanding between two or more people. It is not necessary for the conspirators all to join the conspiracy at the same time, but the parties to it must be sufficiently aware of the surrounding circumstances and share the same object for it properly to be said that they were acting in concert at the time of the acts complained of: Kuwait Oil Tanker at [111]. ii) An intention to injure another individual or separate legal entity, albeit with no need for that to be the sole or predominant intention: Kuwait Oil Tanker at [108]. Moreover: a) The necessary intent can be inferred, and often will need to be inferred, from the primary facts – see Kuwait Oil Tanker at [120-121], citing Bourgoin SA v Minister of Agriculture [1986] QB 716: “[i]f an act is done deliberately and with knowledge of the consequences, I do not think that the actor can say that he did not 'intend' the consequences or that the act was not 'aimed' at the person who, it is known, will suffer them”. b) Where conspirators intentionally injure the claimant and use unlawful means to do so, it is no defence for them to show that their primary purpose was to further or protect their own interests: Lonrho Plc v Fayed [1992] 1 AC 448, 465-466; see also OBG v Allan [2008] 1 AC 1 at [164-165]. c) Foresight that his unlawful conduct may or will probably damage the claimant cannot be equated with intention: OBG at [166]. iii) In some cases, there may be no specific intent but intention to injure results from the inevitability of loss: see Lord Nicholls at [167] in OBG v Allan, referring to cases where: “The defendant's gain and the claimant's loss are, to the defendant's knowledge, inseparably linked. The defendant cannot obtain the one without bringing about the other. If the defendant goes ahead in such a case in order to obtain the gain he seeks, his state of mind will satisfy the mental ingredient of the unlawful interference tort.” iv) Concerted action (in the sense of active participation) consequent upon the combination or understanding: McGrath at [7.57]. v) Use of unlawful means as part of the concerted action. There is no requirement that the unlawful means themselves are independently actionable: Revenue and Customs Commissioners v Total Network [2008] 1 AC 1174 at [104]. vi) Loss being caused to the target of the conspiracy.’
[36]The Deputy Judge also set out and adopted the further points made by Mr Justice Bryan when rejecting the challenge to the jurisdiction of the English court in the present case (Lakatamia Shipping Co Ltd v Su [2023] EWHC 1874 (Comm) [2024] 1 WLR 746): ‘106.(1) Dishonesty is not itself an element of the tort, see Arcelormittal USA LLC v. Ruia [2020] EWHC 3349 (Comm), at [27 (3)].(2) Justification is not a defence, see, for example, Palmer Birch v. Lloyd [2018] EWHC 2316 (TCC); [2018] 4 WLR 164, at [192]–[193]; [Lakatamia Shipping Co Ltd v Su [2021] EWHC 1907 (Comm)], at [81]; Seneschall v. Trisant Foods Ltd [2023] EWHC 1029 (Ch), at [151]–[160]. Justification cannot be a defence since the element of unlawful means connotes the absence of justification, see JSC BTA Bank v. Khrapunov [2018] UKSC 19; [2020] AC 727 at [10] …(3) The combination element requires that “at least one of” (but not necessarily all of) the conspirators will use unlawful means – see Revenue and Customs Commissioners v. Total Network SL [2008] UKHL 19; [2008] 1 AC 1174, at [213]. Thus, there is no requirement that all of the conspirators will use unlawful means. It is also unnecessary that the combination be, for example, contractual in nature, or that it be an express or formal agreement, see Kuwait Oil Tanker Co SAK v. Al Bader (No.3) [2000] 2 All ER (Comm) 271 (CA), at [111].(4) The element of unlawful means comprises conduct lacking 'just cause or excuse' (see JSC BTA Bank, at [10]). Contempt of court and steps taken to prevent the enforcement of judgments constitute unlawful means (see at [16]).(5) The intention to injure need not be the defendant's predominant intention, see JSC BTA Bank, at [13]. Nor need he or she act maliciously in the sense that harm to the claimant need not be the end sought.(6) It is enough that harm to the claimant was the means by which the defendant sought to achieve his or her end, i.e. that the defendant knew (or turned a blind eye to the fact) that injury to the claimant would ensue - see ED&F Man Capital Markets Ltd v. Come Harvest Holdings Ltd [2022] EWHC 229 (Comm) 487, [500]. In The Eurysthenes [1977] Q.B. 49 (CA) at 68, Lord Denning M.R. said that “If a man, suspicious of the truth, turns a blind eye to it, and refrains from inquiry – so that he should not know it for certain – then he is to be regarded as knowing the truth”.(7) The damage requirement calls for proof of “damage caused by the conspiracy”, Palmer Birch v. Lloyd, supra, at [239].'[37]The fact that not all of the conspirators need themselves use unlawful means is significant in this case. Thus, even if Maître Zabaldano was acting lawfully in accordance with Monegasque law, a point which was in issue and which the Deputy Judge did not resolve, undoubtedly Mr Su was acting unlawfully in procuring the transfer of funds to UP Shipping in breach of the freezing order and Maître Zabaldano assisted him to achieve his objective.

The position of Mr Chang

[38]The Deputy Judge rejected the claim against Mr Chang because he was not satisfied that Mr Chang knew, at the time he ordered the transfer of the proceeds of sale to UP Shipping,(1) that Mr Su was bound by the freezing order or(2) that Mr Su still owed the judgment debt at the relevant time, although(3) the Deputy Judge was satisfied that Mr Chang knew that Mr Su was the ultimate beneficial owner of Cresta Overseas. He took the view that the evidence showed no more than that Mr Chang did whatever he was told to do by Mr Su, without necessarily having any understanding of what he was doing or why he was doing it.[39]Mr S. J. Phillips KC for Lakatamia submitted that this finding was plainly wrong, being one which no reasonable judge could have reached (Volpi v Volpi [2022] EWCA Civ 464, [2022] 4 WLR 48, para 2). He pointed out that Mr Chang was a director of at least three of the companies who were respondents to the freezing order; that he swore an affidavit of assets on behalf of one of those companies, Iron Monger I Ltd; that there was no reason for Mr Chang to have thought that the freezing order was no longer in force by the time of the sale of the villas; that Mr Chang was a long-standing employee of Mr Su charged with the management of numerous of his companies and, as such, must have been aware of the disruption which the freezing order would inevitably have caused; that he must have discussed this with his co-director of Cresta Overseas, Mr Garrett; that he must have known that Mr Garrett had resigned abruptly when instructed to transfer the proceeds of sale to UP Shipping; and that he must have known that the existence of the freezing order was among the reasons why Cresta Overseas had been unable (as the Deputy Judge found) to refinance its obligations to Barclays Bank, resulting in the villas having to be forcibly sold.[40]As to Mr Chang’s knowledge of the judgment debt, Mr Phillips relied in addition on the facts that Mr Chang was a director of at least three of the defendants against whom the liability judgments were entered; that he must have known that those companies had joined in the application for permission to appeal against the liability judgments, and that the appeal lapsed when security was not provided; that there was no reason for him to think that the judgment debt had been paid by the time of the sale of the villas; and that he must have been aware of Lakatamia’s unsuccessful attempt to intervene in the proceedings in Monaco to prevent the sale of the villas, not least because he must have discussed this with Maître Zabaldano.[41]Despite the high bar which faces an appellant seeking to disturb a judge’s findings of fact, I would accept these submissions. It beggars belief that Mr Chang did not know of the judgment debt or the freezing order when the villas were sold and the proceeds of sale dissipated. If he did not know, that can only be because he deliberately turned a blind eye and did not want to know. But even if that were so, it would be sufficient to fix him with the relevant knowledge for the purpose of liability. The position of Maître Zabaldano 42. The judgment

The position of Maître Zabaldano

[42]The Deputy Judge concluded that the effect of the findings which I have summarised at paras 31 and 32 above was that all the elements of a claim in unlawful means conspiracy were established. As he put it:
‘76. On my findings, Maître Zabaldano agreed to make the transfer of the Cresta Overseas Monies, following an instruction of Mr Chang which Maître Zabaldano knew came from Mr Su. Maître Zabaldano knew of the Freezing Order and the existence of the Judgment Debt. He knew that Mr Su had an interest in the Cresta Overseas Monies, and that the transfer would be in breach of Mr Su’s obligations under the Freezing Order. 77. I am bound by authority – see paragraph 22 above – to hold that Maître Zabaldano can be liable for unlawful means conspiracy even though (as I find) he honestly believed that he was entitled to do what he did. While Lewison LJ disagreed in Racing Partnership (at [213]-[265]), the majority decision binds me.’
[43]The majority decision in Racing Partnership Ltd v Done Bros (Cash Betting) Ltd [2020] EWCA Civ 1300, [2021] Ch 233 to which the Deputy Judge referred was to the effect that the claimant must prove that each of the defendants knew the facts which rendered the means unlawful, but need not show that the defendants knew that the means were unlawful. On the basis of that authority it made no difference that, as the Deputy Judge found, Maître Zabaldano honestly believed that he was entitled to obey the instruction to transfer the proceeds to UP Shipping. For the same reason, it is unnecessary now for this court to determine Lakatamia’s challenge to that finding of the Deputy Judge.[44]If the Deputy Judge had stopped there, he would have held Maître Zabaldano liable in unlawful means conspiracy. But he did not stop there. As he explained, it occurred to him when preparing his judgment that the Babanaft proviso in the freezing order might mean that Maître Zabaldano had no liability in tort for his actions in transferring the proceeds of sale of the villas to UP Shipping. What he had in mind was the proviso that ‘the terms of this Order do not affect or concern anyone outside the jurisdiction of this Court’. The Deputy Judge therefore invited post-hearing written submissions on this question, which were duly provided by Lakatamia and Mr Su. Having considered those submissions, he decided that Maître Zabaldano was entitled to the benefit of the Babanaft proviso and that it meant that he could not be liable for unlawful means conspiracy in this case. Did the Babanaft proviso provide Maître Zabaldano with a defence?[45]I should set out in full the terms of the proviso, which was in the standard form used in the Commercial Court:
‘(1) Except as provided in sub-paragraph (2) below, the terms of this Order do not affect or concern anyone outside the jurisdiction of this Court. (2) The terms of this Order will affect the following persons in a country or state outside the jurisdiction of this Court – (a) the Defendant or their officers or agents appointed by power of attorney; (b) any person who – (i) is subject to the jurisdiction of this Court; (ii) has been given written notice of this Order at his residence or place of business within the jurisdiction of this Court; and (iii) is able to prevent acts or omissions outside the jurisdiction of this Court which constitute or assist in a breach of the terms of this Order; and (c) any other person, only to the extent that this order is declared enforceable by or is enforced by a court in that country or state.’ (a) the Defendant or their officers or agents appointed by power of attorney; (b) any person who – (i) is subject to the jurisdiction of this Court; (ii) has been given written notice of this Order at his residence or place of business within the jurisdiction of this Court; and (iii) is able to prevent acts or omissions outside the jurisdiction of this Court which constitute or assist in a breach of the terms of this Order; and (c) any other person, only to the extent that this order is declared enforceable by or is enforced by a court in that country or state.’
[46]The question whether this proviso affords a defence to liability for unlawful means conspiracy to a person outside the territorial jurisdiction of the English court, as distinct from a defence to proceedings for contempt of court, is not free from authority. The issue arose in this court in JSC BTA Bank v Ablyazov (No 14) [2017] EWCA Civ 40, [2017] QB 853 and again when the same case reached the Supreme Court [2018] UKSC 19, [2020] AC 727.[47]In that case Mr Ablyazov had breached the terms of a freezing order against him by dealing with his assets contrary to the terms of the order and had been assisted in such dealing by a Mr Khrapunov. The claimant bank brought an action against both defendants in the tort of conspiracy to injure by unlawful means. Mr Khrapunov, who had been served with the proceedings in Switzerland pursuant to Article 5(3) of the Lugano Convention, challenged the jurisdiction of the English court. He did so on two grounds:(1) that the claim against him was bad in law because a claim for breach of a court order could not constitute unlawful means for the purpose of the tort, and(2) that Article 5(3) did not provide a basis for the English court’s jurisdiction. Both of these grounds were rejected.[48]It was in the course of considering the first ground that the relevance of the Babanaft proviso fell to be considered. In this court

Lord Justice Sales dealt with the point in the following terms:

‘51. … Although it might not be right to subject a person located abroad who benefits from the Babanaft proviso to personal penal sanctions equivalent to those involved in enforcement of the criminal law, they should not be permitted to participate in deliberate unlawful action to undermine the court’s order and defeat the rights of a claimant without being exposed to civil liability to pay compensation. It should be noted that in our case the same point, with which I agree, covers the position of Mr Khrapunov as alleged co-conspirator with Mr Ablyazov, who is the person who is subject to the top worldwide freezing order and the receivership order. … 56. … As I have observed, if the Babanaft proviso applies, that may well be a good reason why the co-conspirator should be exempt from personal penal sanction for contempt of court, but it does not follow that he should be immune from civil action for compensation for his participation in what has been done, which is so obviously unlawful vis-à-vis the claimant. In the case of a freezing order, if a co-conspirator has indeed deliberately helped the addressee of the order to hide his assets covered by that order or in some way render them immune from execution, thereby inflicting loss on the claimant, I consider that it is strongly arguable that justice is in favour of the imposition of civil liability on the co-conspirator to be liable to pay compensation to the claimant.’
[49]On appeal to the Supreme Court the argument that the proviso afforded a defence to a conspiracy claim was briefly but firmly rejected:
‘23. … At first sight, there is more to be said for the argument that a right of action for conspiring to breach a freezing order injunction would expose foreigners to liability notwithstanding the standard provision in such orders that their terms “do not affect or concern anyone outside the jurisdiction of this court”. But the proviso is irrelevant to the position of a party in contempt, such as Mr Ablyazov, who is by definition subject to the jurisdiction of the court. A claim in conspiracy will normally allege conspiracy with the respondent to a court order to breach his obligations under the order, as it does in this case. 24. We conclude that the bank’s pleaded allegations disclosed a good cause of action for conspiracy to injure it by unlawful means.’
[50]Unpacking this reasoning a little, Mr Khrapunov, a foreigner outside the territorial jurisdiction of the court who therefore had the benefit of the proviso, could be liable in conspiracy for assisting Mr Ablyazov, who as the respondent to the freezing order did not have the benefit of the proviso, to breach his (i.e. Mr Ablyazov’s) obligations under the order, even though Mr Khrapunov could not be committed for contempt. Similarly in this case, even assuming that Maître Zabaldano could not be committed for contempt of court by reason of the Babanaft proviso, he could nevertheless be liable in unlawful means conspiracy for assisting Mr Su to breach Mr Su’s obligations under the freezing order.[51]In my judgment this was a decision of the Supreme Court by which both the Deputy Judge and this court are bound and the Deputy Judge’s reasons for distinguishing the case are untenable.[52]His first ground of distinction (at para 79) was that neither Maître Zabaldano nor Mr Chang was within the territorial jurisdiction of the English court at the time when any relevant act occurred, whereas in Ablyazov it was assumed that the relevant conspiracy was entered into in England. That was true as a factual difference, but the only relevance in Ablyazov to the location of the conspiracy was to do with the second ground of challenge to the jurisdiction of the court, under Article 5(3) of the Lugano Convention. It had nothing to do with the first ground, to which the effect of the Babanaft proviso was relevant. It is not, therefore, a relevant distinction.[53]Second, the Deputy Judge suggested (at para 82) that the passages from Ablyazov set out above were considering a different issue, namely whether there was a rule preventing persons in contempt from being exposed to anything other than criminal penalties; that for this reason they did not address the position of the alleged assister (Mr Khrapunov) but only the alleged contemnor (Mr Ablyazov); and that as a result the reasoning of the Supreme Court was not considering the impact of the proviso on someone outside the jurisdiction, but rather its impact on someone (i.e. Mr Ablyazov) within the jurisdiction. With respect, that is a misunderstanding of the case. The whole decision was concerned with the position of Mr Khrapunov, a foreigner outside the jurisdiction who did have the benefit of the proviso; not with the position of Mr Ablyazov, who did not.[54]Having distinguished the decision of the Supreme Court in these ways, erroneously as I have explained, the Deputy Judge suggested (at paras 84 and 85) that the decision of this court in Ablyazov was not binding because it was only a decision that there was a good arguable case that Mr Khrapunov was not protected by the proviso from liability for unlawful means conspiracy, leaving the Deputy Judge free to decide the issue for himself. While strictly speaking this may be correct, on any view the decision of this court was highly persuasive and, in any event, the Deputy Judge was bound by what the Supreme Court decided. I would also note that the Deputy Judge’s conclusion was contrary to the view expressed by Mr Justice Bryan (Lakatamia Shipping Co Ltd v Su [2021] EWHC 1907 (Comm), para 109) at an earlier stage of the litigation between Lakatamia and Mr Su, and his mother.[55]For these reasons the Deputy Judge was wrong to hold that the Babanaft proviso provided Maître Zabaldano with a defence to liability for unlawful means conspiracy. Was the Deputy Judge wrong to raise the Babanaft proviso issue?[56]In these circumstances it is unnecessary to deal with Mr Phillips’ criticism of the Deputy Judge for having raised the Babanaft proviso issue when it had never been raised by the experienced counsel acting for Maître Zabaldano during his unsuccessful challenge to the jurisdiction of the English court (which included the submission that there was no arguable case against him on the merits). (In fact the point had been mentioned by Maître Zabaldano’s solicitors in correspondence, but had then not been pursued when the challenge to the jurisdiction was made. That was obviously a deliberate (and correct) decision). But in fairness to Mr Phillips, I should say that the Deputy Judge’s apparent criticism of him for not having drawn attention to the issue was unwarranted. Even leaving aside the point that there was some reference to this issue in the course of the proceedings below, the duty of fair presentation does not extend to drawing the attention of the court to points which are hopeless in the light of binding Supreme Court authority.

The position of Mr Su

[57]The claim against Mr Su only failed because the Deputy Judge concluded that neither Mr Chang nor Maître Zabaldano was liable in conspiracy and Mr Su could not be liable for conspiring on his own. As I have concluded that the claims against Mr Chang and Maître Zabaldano should have succeeded, it follows that Mr Su is also liable and it is unnecessary to consider whether, if Mr Chang had not been liable and the Babanaft proviso had given Maître Zabaldano a defence, Mr Su could nevertheless have been liable in conspiracy.

Conclusion on unlawful means conspiracy

[58]For the reasons which I have sought to explain, the claim in conspiracy should have succeeded against all three defendants and the appeal must be allowed.

The Marex tort

[59]This conclusion means that it is unnecessary to deal at any length with the alternative claim against Mr Chang and Maître Zabaldano, i.e. that they are liable for inducement of a breach of rights existing under a judgment (the so-called Marex tort). However, there are some points which I wish to mention.[60]The Deputy Judge adopted the summary of the relevant principles by Mr Justice Bryan in an earlier judgment in the litigation between Lakatamia and Mr Su (Lakatamia Shipping Co Ltd v Su [2021] EWHC 1907 (Comm)), which were based upon the elements of the tort of inducing a breach of contract. This summary was in turn adopted by Mr Justice Foxton in Lakatamia Shipping Co Ltd v Tseng [2023] EWHC 3023 (Comm), paras 20 and 21. Mr Justice Bryan said:
‘126. … the elements of the Marex tort are: (1) The entry of a judgment in the claimant’s favour, (2) Breach of the rights existing under that judgment, (3) The procurement or inducement of that breach by the defendant, (4) Knowledge of the judgment on the part of the defendant, and (5) Realisation on the part of the defendant that the conduct being induced or procured would breach the rights owed under the judgment. 127. I am also satisfied, again by analogy with the tort of inducing a breach of contract, that the following further principles apply to the Marex tort:- (1) It suffices that the defendant intended to violate the claimant’s rights under the judgment. The defendant does not need also to intend thereby to damage the claimant. As Judge Russen QC stated in Palmer at [174]: “In order for liability to be established under the inducement tort, the result intended by the defendant must be a breach of contract. But that is both necessary and sufficient and there is no need for the claimant to go further by establishing an intention to cause damage …” See also, in this regard, OBG Ltd v. Allan [2007] UKHL 21; [2008] 1 AC 1 per Lord Hoffmann at [8]. (2) Just as it is unnecessary for a defendant in a claim for inducing a breach of contract to know the details of the contract provided that they had “the means of knowledge” (Emerald Construction Co Ltd v. Lowthian [1966] 1 W.L.R. 691, 700 per Lord Denning MR), it is inessential that the defendant to a claim for the Marex tort has actual knowledge of the contents of the judgment. (3) In this regard blind-eye knowledge is sufficient. Thus, as was said by Lord Denning in Emerald Construction at page 700, “it is unlawful for a third person to procure a breach of contract knowing, or recklessly, indifferent whether it is a breach or not”. (4) “[A]ny active step taken by the defendant having knowledge of the covenant by which he facilitates a breach of that covenant’ falls within the ambit of the tort: see British Motor Trade Association v. Salvadori [1949] Ch. 556, 565 per Roxburgh J. (5) There is no need to establish “spite, desire to injure or ill will” on the part of the defendant, see Clerk & Lindsell on Torts, at para 23.57.’ (1) The entry of a judgment in the claimant’s favour, (2) Breach of the rights existing under that judgment, (3) The procurement or inducement of that breach by the defendant, (4) Knowledge of the judgment on the part of the defendant, and (5) Realisation on the part of the defendant that the conduct being induced or procured would breach the rights owed under the judgment. (1) It suffices that the defendant intended to violate the claimant’s rights under the judgment. The defendant does not need also to intend thereby to damage the claimant. As Judge Russen QC stated in Palmer at [174]: “In order for liability to be established under the inducement tort, the result intended by the defendant must be a breach of contract. But that is both necessary and sufficient and there is no need for the claimant to go further by establishing an intention to cause damage …” See also, in this regard, OBG Ltd v. Allan [2007] UKHL 21; [2008] 1 AC 1 per Lord Hoffmann at [8]. (2) Just as it is unnecessary for a defendant in a claim for inducing a breach of contract to know the details of the contract provided that they had “the means of knowledge” (Emerald Construction Co Ltd v. Lowthian [1966] 1 W.L.R. 691, 700 per Lord Denning MR), it is inessential that the defendant to a claim for the Marex tort has actual knowledge of the contents of the judgment. (3) In this regard blind-eye knowledge is sufficient. Thus, as was said by Lord Denning in Emerald Construction at page 700, “it is unlawful for a third person to procure a breach of contract knowing, or recklessly, indifferent whether it is a breach or not”. (4) “[A]ny active step taken by the defendant having knowledge of the covenant by which he facilitates a breach of that covenant’ falls within the ambit of the tort: see British Motor Trade Association v. Salvadori [1949] Ch. 556, 565 per Roxburgh J. (5) There is no need to establish “spite, desire to injure or ill will” on the part of the defendant, see Clerk & Lindsell on Torts, at para 23.57.’
[61]On the basis of the facts found by the Deputy Judge, Maître Zabaldano knew of the judgment debt and the freezing order, and cannot have failed to realise that transferring the proceeds of sale of the villas to UP Shipping would put those funds beyond the reach of the freezing order (see para 32 above). So it might have been thought that he would be liable for this tort.[62]However, the Deputy Judge went on to make two further points. The first was that Maître Zabaldano did not have the necessary intention to violate Lakatamia’s rights because, as he found, Maître Zabaldano genuinely believed that he was entitled, and indeed obliged by his professional obligations, to transfer the sale proceeds to UP Shipping. The Deputy Judge drew here on cases dealing with the tort of inducing a breach of contract (Meretz Investments NV v ACP Ltd [2007] EWCA Civ 1303, [2008] Ch 244; and Allen v Dodd [2020] EWCA Civ 258, [2020] QB 781).[63]Mr James Goudkamp, who made submissions as to the Marex tort for Lakatamia, submitted that the judge had misunderstood these cases and that his conclusion could not stand with the leading case of OBG Ltd v Allan [2007] UKHL 21, [2008] 1 AC 1. He submitted that OBG held that in the tort of inducing a breach of contract it is sufficient for liability that the defendant knows that they are inducing such a breach. Thus a defendant will not be liable if they honestly believe that the conduct induced will not be a breach of contract. In such a case, the mental element of the tort will be lacking. In contrast, Mr Goudkamp submitted that it will not be a defence for a defendant who knows that the conduct does amount to a breach to say that they believed they were entitled to induce the breach and that this, on the judge’s finding, was the position of Maître Zabaldano.[64]The judge’s second point was that the Marex tort was subject to a defence of justification, to which Maître Zabaldano was entitled because of his genuine belief that he was entitled and obliged to comply with the instructions given to him for the transfer of the funds. Mr Goudkamp submitted that justification could never be a defence to the Marex tort, in contrast to the tort of inducing a breach of contract, and referred to the obiter view of Mr Justice Bryan to that effect (Lakatamia v Su [2021] EWHC 1907 (Comm), paras 130 and 131).[65]It is unnecessary for us to decide whether these two further points made by the Deputy Judge were correct. In my opinion we should not do so. This is a novel and developing tort and resolution of these issues should await a case in which they are critical and there has been full argument by counsel on both sides. I would also leave open whether, on the assumption that justification can in principle be a defence, the defence would have been made out by Maître Zabaldano on the facts of this case when it was always open to him to have made an application to the English court for directions.

The Monaco court decision and the letter from the Monaco Ordre des Avocats

[66]Finally I should refer to a decision of the Monaco Court of First Instance dated 31st October 2024, some 2 ½ months after the judgment of the Deputy Judge, and a letter to this court from the Monaco Ordre des Avocats dated 2nd October 2025.[67]The decision of the Monaco court was on an application by Maître Zabaldano for declarations that the decision of the English court that it had jurisdiction over Maître Zabaldano was not recognised or enforceable in Monaco and that Maître Zabaldano had not been at fault and has committed no fraud in carrying out the transfer of funds to UP Shipping. These declarations were made in a default judgment issued on 31st October 2024.[68]The letter from the Monaco Ordre des Avocats drew the attention of this court to the decision of the Monaco court and explained that the decision is now subject to a pending appeal. It expressed concern that Monegasque lawyers must comply with their professional obligations under Monegasque law.[69]Despite the respect which this court has for the court in Monaco and the Monaco Ordre des Avocats, these matters cannot affect the outcome of this appeal. The English court held that it had jurisdiction over the claim against Maître Zabaldano. It was then Maître Zabaldano’s choice to take no further part in the proceedings in England, when he could have put forward a defence, on which the English court could have adjudicated, based on his professional obligations under Monegasque law. As it was, the court was left with what was found to be a false account in Maître Zabaldano’s witness statement of what he knew about Mr Su’s beneficial ownership of Cresta Overseas and conflicting evidence about the professional obligations owed by Monegasque lawyers.

Conclusion

[70]I would allow the appeal, set aside paragraph 1 of the order of the Deputy Judge, and enter judgment for Lakatamia against each of the defendants.

LADY JUSTICE FALK:

[71]I agree.

SIR JULIAN FLAUX C:

[72]I also agree.

Cited in 1 later judgment