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Companies released from freezing order in Libyan bribery case

A banker whose assets were frozen by the High Court has succeeded in an application to have the assets of companies he controls removed from the freezing order.06 Nov 2018

The High Court ruled last week that the freezing order imposed on Yoshiki Ohmura, who was found liable of dishonest assistance and bribery in a case brought by FM Capital Partners (FMCP), could be varied to remove references to assets held by three companies in which he held an interest.

The original freezing order applied to all of Ohmura’s assets including "any asset which he has the power, directly or indirectly, to dispose of or deal with as if it were his own".

The order said that he was "to be regarded as having such power if a third party (which shall include a body corporate) holds or controls the asset in accordance with his direct or indirect instructions".

The Court said that it is trite law that a company's assets do not belong beneficially to its shareholders and that it will only be in exceptional cases that a freezing injunction will apply to the assets of a company controlled by the respondent. It said that, where a respondent deals with a company's assets in his capacity as director or shareholder, he is not providing the company with 'instructions' within the meaning of a freezing order but is merely an agent by which the company is making its own decisions.

Civil fraud and asset recovery expert Andrew Barns-Graham of Pinsent Masons, the law firm behind, explained that the decision was consistent with rulings in previous cases.

"The general rule according to the case law is that a freezing order does not apply to the assets of a company controlled by a respondent," he said. "The classic exception is that of a non-trading company which has no active business and which is in reality no more than a vehicle for holding the respondent's assets. However the companies involved in this case were active trading companies and so did not fall into this category."

The court nevertheless ruled that Ohmura must give two working days’ notice to FMCP of any transaction or series of connected transactions exceeding £10,000 in value which deals with or disposes of the assets of the companies. This was on the grounds that, if Ohmura procured the companies to deal with their assets, this would represent a breach of the freezing order if the effect of the dealing was to diminish the value of Ohmura's shareholding.

“The decision is a good example of how the English Courts balance the need for freezing orders to achieve their objective of preserving assets for enforcement purposes against the competing need for freezing injunctions to be clear and unequivocal and strictly construed in favour of respondents due to the penal consequences for non-compliance. It was held on the one hand that the companies' assets fell outside the scope of the freezing order, but on the other hand that there were nevertheless sufficient grounds to require the respondent to notify the claimant before arranging any dealings with the companies’ assets", Barns-Graham said.

“The order was justified not least because the claimant had already obtained a judgment against the respondent which had not been satisfied and because the evidence established that any dealings and dispositions by the company would be within the respondent’s knowledge. Whether or not the courts will be prepared grant such orders in other circumstances, for example at the pre-trial stage, remains to be seen,” Barns-Graham said.

“From a client perspective, if there is one point to take away from the judgment, it is that the drafting and interpretation of freezing injunctions is an extremely technical area of law on which it is essential to seek specialist advice,” Barns-Graham said.