Earlier this year the High Court recognised a new form of tortious wrongdoing which will be welcomed by judgment creditors who are suspicious that a judgment debtor and/or its relations are involved in dissipating assets to intentionally avoid enforcement of a judgment debt.
This new form of tortious wrongdoing is known as the ‘Marex tort’ which was first acknowledged in Sevilleja v Marex Financial Ltd1 (the “Marex Judgment”). This being in the context of the dissipation of assets of a judgment debtor by its owner, following the circulation of a draft judgment, that otherwise would have been available to satisfy the judgment debt.
Since then the High Court has considered and confirmed the applicability of the Marex tort, in a judgment of Bryan J, in the long running saga that is the Lakatamia Shipping Co Ltd v Nobu Su2 litigation (the “Lakatamia Judgment”). This being in the context of the dissipation of assets of a judgment debtor by a third party, following judgment being entered, that otherwise would have been available to satisfy the judgment debt.
The Lakatamia Judgment is good news for judgment creditors as it confirms the parameters of the Marex tort. Further, the case has potentially quite profound implications upon the carriage of justice, especially as it is more difficult for judgment creditors (when seeking to enforce a judgment debt) to establish alternative remedies against third parties such as unlawful means conspiracy.
- The Marex tort applies to the scenario where a third party has put or assists to put assets of a judgment debtor beyond the reach of a judgment creditor that otherwise would be available to satisfy a judgment debt.
- Bryan J stated that “The Marex tort finds a close, and I consider compelling, analogy with the tort of inducing a breach of contract.”
- The Marex tort is, perhaps, an example of another means by which the Courts can get around the strict principles that govern company law and the doctrine of veil piercing in order to try and put the parties in the position they would have been, but for the dissipation of assets.
Background – Marex Judgment
Marex had entered into a contract with two BVI companies, Creative Finance Ltd and Cosmorex Ltd. Following a breach of contract by Cosmorex, Marex commenced proceedings and on 19 July 2013, a draft judgment was sent to the parties by Field J (the “Field J Judgment”), upholding Marex’s claim. Between that date, and the date that the Field J Judgment was handed down on 26 July 2013, the owner of the two defendant companies, Mr Sevilleja, stripped the companies of all assets. When Marex realised this it commenced proceedings against Mr Sevilleja, alleging, amongst other matters, that Mr Sevilleja’s actions made good a tort of “knowingly inducing and procuring the Companies to act in wrongful violation of Marex’s rights under the judgment”.
The Supreme Court found that wrongfully violating judgment rights by putting assets beyond the reach of creditors was in fact a tortious action.
Background – Lakatamia Judgment
Lakatamia obtained a judgment against the former shipping tycoon and billionaire, Nobu Su. When Lakatamia came to enforce that judgment it became apparent that Mr Su’s Mother, Madam Su, and a number of other corporate defendants had assisted Mr Su to dissipate his assets, namely, two villas in Monaco and a private jet owned by companies controlled by Mr Su.
Accordingly, Lakatamia alleged that Mr Su and Madam Su conspired together to injure Lakatamia by unlawful means, namely by the dissipation of the two villas and private jet in breach of a worldwide freezing order which was made against Mr Su in related Commercial Court proceedings to which Mr Su is still subject, and secondly an alleged cause of action premised on the intentional violation of rights in a judgment debt (i.e. the Marex tort).
The Marex Tort
The Marex tort is a development of the tort of inducing a breach of contract. Accordingly, the elements required to establish a Marex tort claim are identified by analogy with the tort of inducing a breach of contract.
The elements required to establish a Marex tort claim are:
- The entry of a judgment in the claimant’s favour;
- Breach of the rights existing under that judgment;
- The procurement or inducement of that breach by the defendant;
- Knowledge of the judgment on the part of the defendant; and
- Realisation on the part of the defendant that the conduct being induced or procured would breach the rights owed under the judgment.
Madam Su described the Marex tort as a “novel” tort. Though, Bryan J countered that submission by saying “it is only novel in the sense of being newly recognised as a form of tortious wrongdoing … the English courts continue to recognise and acknowledge further types of tortious wrongdoing – a recent example being the recognition of the tort of malicious prosecution of civil proceedings (Willers v Joyce  UKSC 43;  AC 779)”.
Ultimately, Bryan J concluded that Lakatamia’s cause of action against Madam Su and the other corporate defendants in inducing and/or facilitating a breach of the judgment debt in relation to the dissipation of the two villas and the private jet was made out and that their Marex tort claim was successful.
He concluded that:
He concluded that:
“In this regard, and on the basis of the findings that I have made, there has been the entry of a judgment in Lakatamia’s favour (the Judgment Debt) that Madam Su and UP Shipping know about, Madam Su and UP Shipping have procured and/or induced Mr Su to make the transfer of the Aeroplane Proceeds to UP Shipping (and hence to Madam Su’s control) and/or have facilitated its making, such conduct has breached the rights of Lakatamia under the Judgment Debt and Madam Su and UP Shipping knew that such conduct would breach the rights owed under the Judgment Debt.”
He also made the same finding in respect of the two villas.
Accordingly, Madam Su and the other corporate defendants were found liable for compensatory damages in the sums of $857,329.73 and €27,127,855.01 being the amounts dissipated pursuant to the private jet and two villas.
It should be noted that the Lakatamia Judgment itself is extremely useful in setting out exactly what a judgment creditor must show in order to succeed in bringing a Marex tort claim.
This development in English law should be welcomed by judgment creditors. It is yet another example of the flexibility of the common law of England and Wales and its ability to adapt with the changing times as the schemes used by judgment debtors to avoid paying judgment debts become more and more sophisticated.
Plainly, it is a useful tool available to those judgment creditors who are having issues enforcing their judgment debt and/or suspect assets have been dissipated subsequent to a judgment being entered.
Specifically, it is extremely useful to judgment creditors where third parties are involved because they can now be pursued separately without the need to show conspiracy between the third party and the judgment debtor which is required in an unlawful means conspiracy claim.
It will be an interesting area of new law to watch and see whether judgment creditors make use of the relief available to them.
 Sevilleja v Marex Financial Ltd  UKSC 31
 Lakatamia Shipping Co Ltd v Nobu Su  EWHC 1907 (Comm)
Authored by Ben Rutledge, Associate.