Marex Financial Limited v. Carlos Sevilleja Garcia [2017] EWHC 918 (Comm)

This recent decision on a jurisdictional challenge has provided greater clarity and potentially created a tortious cause of action where a debtor dissipates assets prior to judgment and subsequent freezing order.


In July 2013, Marex Financial Limited ("Marex") obtained judgment in excess of $5 million in a case against two companies registered in the British Virgin Islands ("BVI"): Creative Finance Limited and Cosmorex Limited. A freezing order was subsequently obtained, and in compliance with the disclosure required under this order, the Companies stated combined assets of $4,392.48. The Companies subsequently entered Liquidation in the BVI.

Marex contend that Mr Sevilleja, as beneficial owner, de facto director and controlling mind of the Companies, dishonestly stripped the assets, $9.5 million held in the Companies' accounts in England, in the period after the draft judgment was supplied to them but prior to the final judgment being handed down.

Marex tried to recover the judgment debt in a number of different ways, before bringing the current claim against Mr Sevilleja for violating their rights under the judgment and/or intentionally causing loss by unlawful means. Mr Sevilleja made an application to challenge this claim on the basis of jurisdiction and that the claims had no basis in law.


The jurisdictional challenge was brought on the basis that any pursuit should have been through the BVI as the Companies were in Liquidation in that jurisdiction, and that Mr Sevilleja was not resident in England and Wales. This challenge was dismissed as the actions taken by Mr Sevilleja were to allegedly thwart a judgment in proceedings in an English court, and that the claims against Mr Sevilleja personally, and not the Companies.

Mr Sevilleja's arguments that the claims had no basis in law were broken down into three parts. Firstly, that there is no tort of knowingly inducing or procuring the Companies to act in wrongful violation of Marex's rights under the judgment. Marex relied upon the principle in Lumley v. Gye, where a similar tort was established in the context of violation of a contract. Whilst not definitive, comments from Knowles J indicate that, as the underlying case was contractual, Marex had the better of the argument that this tort could be extended to apply to the attempt to thwart the judgment.

Secondly, Mr Sevilleja challenged the basis of the unlawful means claim. Marex's claim in this regard relied upon a breach of fiduciary duty as well as breaches of BVI law. His submission was that, notwithstanding the fact he removed the money that would have allowed them to pay, the Companies retained the ability to deal with the debt and negotiate payment terms. The Court  rejected this argument.

Finally, Mr Sevilleja submitted that even if a cause of action in tort did exist, the rule against reflective loss would bar the action. The rule originates from the decision in Johnson v. Gore Wood & Co, in which it was held a shareholder cannot bring an action where the company has an actionable claim to recover the loss. The Court considered whether this rule should be extended to also bar claims by creditors, but decided that for these specific torts, the rule did not apply.

The indication that there is a potential tortious claim in the English courts where directors seek to frustrate judgments may be of great assistance for creditors, even where the insolvent company is in Liquidation in another jurisdiction. The full hearing of the claim should clarify whether this is an extension of the existing tort, or a new tort altogether, as well as the anticipated scope and rules that shall govern it. 

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