CMOC v Persons Unknown

This is an application for worldwide freezing relief against persons unknown. For the purposes of application, I have been addressed by leading counsel. I have also had the opportunity of perusing in full the very thorough and comprehensive skeleton argument. I have also read the affidavits of Mr Flood and Mr Young, and I have been taken to the relevant provisions of the order. This is a claim which arises out of an alleged fraud which has been committed by as yet persons unknown infiltrating the email account of one of the senior management of the claimant; such persons were then able to send payment instructions purporting to come from Mr Chen to the administration of the company, but not in fact coming from him. As a result a number of very large payments were sent out from the company's bank account, at Bank of China in London, to various other banks around the world. The allegation is that this was a complex infiltration of the claimant's system so as to extract the monies, which are something in the region of £6.3 million in total.

The first question is whether I have jurisdiction to permit the service of the claim form at all here when there is no named defendant. That the court has jurisdiction in general against persons unknown has been confirmed for the purpose of the CPR regime by the case of Bloomsbury v. News Group Newspaper, [2003] EWHC 1205 in the judgment of the then Vice-Chancellor, and the key point is that this can be permitted provided that:

That case concerned an application for an interlocutory injunction against those who had been responsible for removing copies of an unpublished Harry Potter book without authority and then offering them for sale to the press. Thus, tit is authority that an interlocutory injunction can be granted against persons unknown. The thinking behind that was repeated by Vice-Chancellor again in a later injunction case, Hampshire Waste Services [2003] EWHC 1738.

The novel aspect of this case is that the injunction concerned is a freezing injunction. At this stage I can see no reason in principle against, and indeed a good arguable case for, saying that this should extend to a freezing injunction. If there are potential problems down the line concerning contempt, or there is a need to ensure that there has been proper notification of any relevant defendant of the injunction, that potential difficulty applies as much to the cases where other forms of injunctions against third parties have already been granted. So that is not a good reason not to extend the principle. Conversely, there is a strong reason for extending the principle which is that the freezing injunction can often be a springboard for the grant of ancillary relief in respect of third parties, which arguably could not get off the ground unless there has been a primary freezing injunction. That is very much the case in fraud litigation and is very much the case here where the first object is of course to notify the banks of the freezing injunction so that they can freeze the relevant bank accounts - irrespective of if and when it comes to the attention of the underlying defendants, And then, secondly, on the basis of that, to obtain vital information from the various banks which may assist in positively identifying some or all of the defendants. And I note that the latest edition of Gee on Injunctions takes the same view. See in particular para.17-019 at p.601 at the top of the page. So it seems to me there is at least a good arguable case that the court has jurisdiction to allow the claimants to bring a claim of this kind.

The defendants need to be clearly identified and, with some amendment, I am satisfied that that has been done in the right way, because it makes reference to those who have been involved in the activities said to have constituted the fraud, which is set out in the body of the claim form, and by reference to particular transfers from the Bank of China accounts to other bank accounts. These are themselves are then listed in the schedule. The other species of defendant are - and they may or may not be the same persons - those who are the legal or beneficial holders of those accounts. All of that that seems to me to make it sufficiently clear to anyone affected by this claim, whether they fall within the category of defendant or not.

I deal next with the question of service out of the jurisdiction. The immediate loss to the claimant is the deprivation of funds which were otherwise sitting in its bank account with Bank of China in London. It seems to me that there is a good arguable case that the tort gateway is thereby fulfilled because damage is sustained within the jurisdiction. See para.3.1(9)(a) of 6B Practice Direction, or alternatively the restitutionary head at 3.1(16). Hereafter it may also be the case that if such jurisdiction is established on the basis of it's established against one defendant, there may be an additional ground under para. 3.1(3) that another defendant is a necessary and proper party, since it is a conspiracy claim, but that does not arise at this stage.

I also consider that there is good reason for there to be alternative service so far as service out of the jurisdiction is concerned, and that principally relates to service on the recipient banks at some particular email addresses which have been obtained, and at one physical address.

Of course the court also has to be satisfied, even if the gateway is fulfilled, that here is clearly the more appropriate forum. At this stage, it is not obvious to me that there is any appropriate forum other than this jurisdiction because this is the location of where the monies were taken from. So for that reason, I consider that that requirement is fulfilled as well.

I have made a number of changes to the draft order which I do not propose to go through, save to say that it seems to me at this stage that there should be some provision for living and legal expenses at least until the return date of 3^rd November, notwithstanding that some or all of the monies which are frozen might be the subject of the proprietary claim. I say that not least because at the moment each defendant has a prohibition on disposing of their assets up to £8m, which of course is the total claimed, plus an allowance for costs of £1.7 million, simply on the basis that they are co-conspirators. I am also satisfied that at this stage, again with a slight amendment, the provision of information against the defendants is triggered either by service or by the content of this order being clearly drawn to their attention. And with the other amendments that I make, I am going to grant that relief.

It seems to me that, first of all, there is a good case for seeking the information in documents contained in the order which I am making in respect of the banks, because that is the critical source to discover what has happened to the money which has been paid out from the claimant's bank account in London pursuant to the alleged fraud. I am satisfied there is jurisdiction to do that under Bankers Trust v. Shapira principles, and/or CPR 25.1(1)(g). Secondly, there still has to be a case for service out even if no positive remedy is sought against those defendants other than the information. For present purposes I am satisfied that in relation to those banks which are situate outside the EU and outside this jurisdiction, that is covered by the fact that they are a necessary and proper party to the claims which have been brought against the perpetrator defendants; and in respect of service within the EU that Article 7.2 of the recast Brussels Regulation will apply, subject to the claimants filling out and attaching to the claim form, Form 510 where they certify to that effect.