05/12/2018

CMOC Sales & Marketing Limited v Persons Unknown & 30 ors

Commercial Court gives judgment in ground breaking ‘persons unknown’ cyber-fraud litigation

Commercial Court grants final proprietary relief and damages at trial in ground breaking cyber-fraud litigation that saw the first known Worldwide Freezing and Proprietary Injunctions against Persons Unknown and service permitted by the Facebook and WhatsApp Messenger platforms and by access to online data room.

The English Commercial Court has today released its written judgment in CMOC Sales & Marketing Limited v Persons Unknown & 30 ors [2018] EWHC 2230 (Comm). The case concerned a sophisticated cyber-fraud in which Persons Unknown caused CMOC’s London bank to pay out sums circa USD 8 million to various accounts in 19 jurisdictions around the world. In the nine-month period between discovering the fraud and the trial in this matter, CMOC was engaged in an extensive asset-tracing and freezing exercise to lay the groundwork for recovery of its stolen funds, including some 14 court applications to the Commercial Court in London with a further seven applications made on paper.

HHJ Waksman QC (sitting as a Judge of the High Court) handed down judgment against both the defined class of Persons Unknown and a total of 28 other named Defendants. A consent order and judgment were previously entered in respect of two further named Defendants.

The Judge upheld CMOC’s claims, which included proprietary claims, damages for unlawful means conspiracy, dishonest assistance and knowing receipt and restitution for unjust enrichment. Not all claims were brought against all Defendants, but the effect of the judgment is that each Defendant was found jointly and severally liable for the whole sum stolen plus additional heads of loss. Compound interest and costs were awarded against each of the Defendants pursued at trial. The Judge has also ordered that assets currently held by some Defendants are to be held on trust for CMOC and has additionally granted worldwide freezing orders and proprietary injunctions against all the Defendants in aid of enforcement.

In an important concluding passage to his judgment, the Judge referred to and reflected on “a number of innovative features of this case”, including:

The extension of the Court’s jurisdiction to make worldwide freezing orders so that they can be made against persons unknown; and

The approach of the Court to consider proactively novel methods of alternative service – in this case including by Facebook Messenger, WhatsApp, and by access to online data room.

Paul Lowenstein QC and Matthew McGhee of 20 Essex Street acted for CMOC alongside Philip Hinks of 3 Verulam Buildings. Philip Riches and Harris Bor of 20 Essex Street also acted for CMOC during the interim phases of this litigation. They were instructed by Philip Young of Cooke Young & Keidan LLP.

Extemporary judgment was handed down on 26 July 2018 and the official transcript was released today, 20 September 2018, and is attached below.