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Varying worldwide freezing orders: FM Capital Partners Limited v Marino and others

In the case of FM Capital Partners Limited v Marino and others, Peter McDonald Eggars QC, sitting as a Deputy Judge of the High Court considered the application of the third respondent, Mr Yoshiki Ohmura, to vary a worldwide freezing order. His judgment considers the definition of assets in freezing orders and in particular in the standard form of freezing order as set out by the Commercial Court Guide and the annex to Practice Direction 25A of CPR.

A freezing order was granted following an application by the claimants against Mr Ohmura. The underlying proceedings brought against Mr Omhura were for dishonest assistance to another defendant’s breaches of fiduciary duty, and bribery. On 9 October 2018, Peter McDonald Eggars QC had dismissed an application by Mr Ohmura for the discharge of that freezing order.

The claimant in the action also applied for an order for further disclosure in respect of Mr Ohmura’s assets, and also a variation of the freezing order to reduce the values of transactions which required notification under the freezing order.

Mr Ohmura’s application was that the freezing order should not attach to the assets of several companies. These were:

  • Rubican Financial Holding Limited.
  • Conquest Financial Partners AG.
  • Squadra Course Limited.
  • Style F Service SRL.

As far as the first three of those companies were concerned, Mr Ohmura had 100% direct or indirect shareholding and was a director along with his sister.

Mr Ohmura argued that the companies’ assets belonged to and were in the control of third parties and not Mr Ohmura personally. The claimant argued that the companies’ assets were covered by the freezing order indirectly because if a company dissipates it assets it reduced the value of Mr Ohmura’s shareholding in that company.

On deciding the point, the judge discussed the cases of Lakatamia Shipping Co Ltd v Su, Group Seven Ltd v Alive Investment Corporation Limited and JSC BTA Bank v Ablyazov. He quoted Lord Clarke from the Supreme Court Ablyazov decision:

“The extended definition of assets in the standard form of freezing order captured assets which are not owned legally or beneficially by the respondent, but over which the respondent has control and has the power to dispose of or deal with as if he or she did. In other words the extended definition expands the ordinary meaning of assets.”

It was the judge’s view that the extended definition did not apply to assets over which the respondent has control, but which the respondent does not legally or beneficially own.

He therefore found that the freezing order did not apply to the assets of the companies in which Mr Ohmura had a direct or indirect shareholding. Mr Ohmura also argued successfully that other variations should be made to the freezing order, including a curtailment of the clause referring to him having an interest in assets legally, beneficially or otherwise. This is because there was no evidence that Mr Ohmura owned any assets as a trustee nominee or any other basis other than as the legal or beneficial owner.

The judge also gave the claimant some satisfaction. In relation to notification of the sale of assets from the companies owned by Mr Ohmura, the claimant had to be notified of any dealing or disposal of assets.

The court then turned to the application for further disclosure. The claimant sought an order for disclosure of information relating to:

  • All transfers of more than a specified limit made from Mr Ohmura and two bank accounts belonging to his companies since 12 October 2015.
  • Details of the turnover and profit made by three of the companies.
  • Other information that had been requested in inter partes correspondence.

The judge allowed the order for further disclosure with the following reasons:

  • He had already decided there was a real risk of dissipation of assets.
  • There was an obvious discrepancy between the funds and assets which were at one time held by Mr Ohmura and the assets actually disclosed by him.
  • Mr Ohmura did not originally comply with the disclosure order made in the worldwide freezing order dated 13 September 2018.
  • Such an order was justified in order to identify not only what assets were held by Mr Ohmura, but what has become of any assets which he may have dissipated.
  • The disclosure sought was not burdensome and could be provided without substantial expense.

Notes for practitioners

This is an interesting judgment and gives further clarity following the recent cases of Lakatamia Shipping Co Ltd v Su and JFC BTA Bank v Ablyazov.

In particular, it serves as a reminder as to which third party assets can be frozen and what the court considers relevant, even when those third parties are closely related to a party to the litigation.

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