A judgment has no value if you can't enforce it. Even if the other party has assets at the beginning of a dispute, and there are no grounds at that stage to freeze them, the assets may not be there after judgment.


In two recent cases judgment creditors had to think creatively in trying to enforce against parties who had taken steps (or others who had assisted them in doing so) to avoid paying judgments of the English courts.

Does asset stripping post judgment (when there's no freezing order in place) amount tortious conduct?

Marex Financial Ltd v Carlos Sevilleja Garcia, Comm, 25 April 2017

In August 2013 the court granted freezing orders against two BVI companies against whom a claimant foreign exchange trader (Marex) had obtained judgment a few weeks earlier for more than $US5 m. But disclosure under the provisions of the freezing orders revealed assets of only $4.3m. It appeared that the owner and controller of the companies, Mr Sevilleja, had stripped the assets, between receiving the draft judgment on 19 July 2013 and the granting of the freezing order on 14 August 2013. Marex started a separate claim against Sevilleja personally which it served on him out of the jurisdiction. He asked the court to set aside service and to decline jurisdiction on the basis that the claims against him, for procuring his companies to act in wrongful violation of Marex's rights under the judgment, and intentionally causing loss by unlawful means, had no basis in law.

Mr Justice Knowles held that Marex had the better argument for the existence of the tort but, for the purposes of dismissing Sevilleja's application, he didn't need to make a final determination on the point.

Embargoed judgments – what are you permitted to do with them?

Knowles J noted in Marex that the draft judgment circulated to the parties "in confidence" contained the usual warning that "no action [was] to be taken (other than internally) in response to the draft before judgment has been formally pronounced". It was not clear, he said, what "other than internally" means and he suggested that there be a review of the standard wording. This is important because, in a case like this one, the judgment creditor will usually only be in a position to apply for a freezing order to preserve assets to satisfy the judgment at the earliest when it is formally handed down. Whilst asset stripping in response to a draft judgment, and in the face of such a warning, would obviously not be permitted, and would probably be treated as a contempt of court, clarity as to what is permitted while a judgment is embargoed (such as instructing lawyers to prepare an application to freeze assets, for example) would be helpful. In this case Marex had not asked the court to address Sevilleja's conduct as a contempt, and Knowles J did not consider he should do so of his own motion, although he noted that anyone who acts as Sevilleja was alleged to have acted "is at risk of serious consequences".

Search order in aid of execution of judgment

In another noteworthy decision (Abela v Baadarani, ChD) Nugee J has refused to set aside a search order made against third parties, to assist in execution of a judgment. The third parties had already failed fully to comply with an earlier order for disclosure, and evidence suggested that they had conspired with the judgment debtor to backdate documents, so they weren't "squeaky clean". Although the judge was not prepared to place unnecessary limits on the availability of search orders, he accepted that, as one of the two most draconian types of order available under English law (the other being freezing orders), such orders will be extremely rare.

The Abela decision shows the courts taking a pragmatic approach to helping parties to enforce judgments

Key contact

Kate Menin

Kate Menin

Principal Knowledge Lawyer, Dispute Resolution
London

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