Lakatamia Shipping Company Ltd & Ors v SU & Ors

Factual and Procedural Background

This opinion concerns an application by the First Claimant ("Lakatamia") under CPR Part 31.22 seeking permission to use documents obtained from the Respondent ("Mr Su") pursuant to a search order granted in related proceedings ("the Morimoto Proceedings"). The Morimoto Proceedings involve claims against the Second Defendant ("Mrs Morimoto"), Mr Su's mother, alleging her assistance in evading enforcement of court orders against Mr Su.

Lakatamia, a shipping company, entered into freight forwarding agreements with Mr Su and his associated companies in 2008. Mr Su breached these agreements, causing substantial losses, resulting in judgments against him totaling approximately US$60 million. Efforts to enforce these judgments have been ongoing for years, including freezing orders and committal proceedings for contempt due to asset dissipation.

Mr Su was found to have dissipated proceeds from the sale of valuable properties ("Monegasque Villas") through corporate entities. Mrs Morimoto was alleged to have received these proceeds and to have acted in concert to frustrate enforcement. Consequently, Lakatamia initiated the Morimoto Proceedings asserting unlawful means conspiracy and related tort claims.

Following a search order granted by the court, Lakatamia obtained approximately 800,000 documents from Mr Su, subject to review by Independent Reviewing Lawyers. Lakatamia sought permission to use these documents in the Morimoto Proceedings, giving rise to the present collateral use application. The trial in the Morimoto Proceedings was scheduled to commence in March 2021.

Legal Issues Presented

1. Whether permission should be granted under CPR 31.22 to use documents obtained under a search order in separate but related proceedings (the Morimoto Proceedings).
2. Whether an implied permission existed within the terms of the search order allowing such collateral use.
3. The consequences and appropriate sanction for any breach of the restriction on collateral use imposed by CPR 31.22 and the search order undertaking.

Arguments of the Parties

Appellant's (Lakatamia's) Arguments

• The documents obtained are relevant and disclosable in the Morimoto Proceedings and their use would assist in enforcing the judgment debt.
• The Morimoto Proceedings are closely related and effectively an extension of enforcement efforts against Mr Su, making the use of documents appropriate.
• Mr Su is a party to both proceedings, and his bankruptcy status limits enforcement options, justifying the use of documents in related proceedings.
• The application was not resisted by Mr Su, and Mrs Morimoto herself sought disclosure of the documents, indicating acceptance.
• There is strong public policy in favour of promoting enforcement of judgments and addressing alleged conspiracies to frustrate enforcement.
• Lakatamia contended there was an implied permission within the search order undertaking to use documents for "related subject matter" proceedings, including the Morimoto Proceedings already underway.
• Lakatamia acknowledged the sensitivity of collateral use and sought the Court's sanction despite believing implied permission existed.

Respondent's (Mrs Morimoto's) Arguments

• Concerns that the collateral use application was issued in separate proceedings, limiting the defendants' ability to respond or obtain evidence.
• Alleged breaches of the collateral use restrictions, including use of documents without permission and deployment of correspondence obtained from other proceedings.
• Argued that Lakatamia's use of documents in the Morimoto Proceedings without permission breached CPR 31.22 and was improper.
• Highlighted that previous breaches had occurred, including use of witness statements in separate committal proceedings without permission.
• Raised issues about the timing and manner of document searches and use, asserting lack of case management transparency and fairness.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analysed the application against the framework of CPR 31.22, which prohibits collateral use of disclosed documents except in limited circumstances, such as court permission or agreement by the disclosing party. The court emphasised the public interest in restricting collateral use to protect privacy and encourage frank disclosure.

The court rejected Lakatamia's argument that an implied permission existed within the search order undertaking allowing use of documents in pre-existing related proceedings. It held that the undertaking's wording, standard in search orders, does not extend to collateral use beyond commencing new proceedings and that extending it as Lakatamia proposed would undermine the scheme of CPR 31.22.

The court found that Lakatamia breached the collateral use restriction by using documents and conducting searches related to the Morimoto Proceedings without permission, including directing Independent Reviewing Lawyers to apply search terms specific to those proceedings. The breaches escalated in seriousness, culminating in the use of "Sherry correspondence" which was regarded as a serious and improper ambush.

Despite the breaches, the court noted mitigating factors: the breaches were not deliberate, the documents are highly relevant, no prejudice was demonstrated by other parties, and the complex and poorly drafted nature of CPR 31.22 contributed to confusion. The court also considered the strong public policy in favour of enforcing judgments and addressing alleged conspiracies to frustrate enforcement.

Balancing these factors, the court concluded that refusing permission would impose a disproportionate sanction on Lakatamia and that retrospective permission should be granted. However, the court made clear the seriousness of the breaches and the need for strict adherence to collateral use rules going forward.

The court also ordered costs consequences, requiring Lakatamia to pay all costs of the exercise on an indemnity basis.

Holding and Implications

The court's final decision was to grant retrospective permission for Lakatamia to use the documents obtained under the search order in the Morimoto Proceedings.

This decision allows Lakatamia to continue using the documents despite having breached the collateral use restrictions initially. The court imposed a formal judgment to underline the seriousness of such breaches and to caution parties about the risks involved.

The direct effect is that Lakatamia may proceed with the use of the documents in the related proceedings, subject to the court's permission now granted retrospectively. Costs are to be borne by Lakatamia on an indemnity basis.

No new legal precedent was established; rather, the decision applies existing principles of CPR 31.22 and collateral use, emphasizing the importance of prompt applications for permission and careful compliance with undertakings.